ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For
the fiscal year ended December 31, 2019

or

[ ]

TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For
the transition period from _______ to _______

Commission
file number: 001-15911

CELSION
CORPORATION

(Exact
Name of Registrant as Specified in Its Charter)

DELAWARE

52-1256615

(State
or other jurisdiction of
incorporation or organization)

(I.R.S.
Employer
Identification No.)

997
LENOX DRIVE, SUITE 100,
LAWRENCEVILLE, NJ

08648

(Address
of Principal Executive Offices)

(Zip
Code)

Registrant’s
telephone number, including area code: (609) 896-9100

Securities
registered pursuant to Section 12(b) of the Act:

Title
of each class

Trading
Symbol

Name
of each exchange on which registered

COMMON
STOCK, PAR VALUE
$0.01 PER SHARE

CLSN

NASDAQ
CAPITAL MARKET

Securities
registered pursuant to section 12(g) of the Act:

None

Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes
[ ] No [X]

Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes
[ ] No [X]

Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate
by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the Registrant was required to submit such files). Yes [X] No [ ]

Indicate
by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”,
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large
Accelerated Filer

[ ]

Accelerated
Filer

[ ]

Non-accelerated
Filer

[ ]

Smaller
Reporting Company

[X]

Emerging
Growth Company

[ ]

If
an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes
[ ] No [X]

The
aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $38.2 million as of June
30, 2019 (the last business day of the Registrant’s most recently completed second fiscal quarter) based on the closing
sale price of $1.82 for the Registrant’s common stock on that date as reported by The Nasdaq Capital Market. For purposes
of this calculation, shares of common stock held by directors, officers and stockholders who own greater than 10% of the Registrant’s
outstanding stock at June 30, 2019 were excluded. This determination of executive officers and directors as affiliates is not
necessarily a conclusive determination for any other purpose.

As
of March 24, 2020, 29,257,101 shares of the registrant’s common stock were issued and outstanding.

DOCUMENTS
INCORPORATED BY REFERENCE

Portions
of the Registrant’s definitive Proxy Statement to be filed for its 2020 Annual Meeting of Stockholders are incorporated
by reference into Part III hereof. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days
of the end of the fiscal year covered by this Annual Report on Form 10-K.

Certain
of the statements contained in this Annual Report on Form 10-K (this “Annual Report”) are forward-looking and constitute
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition,
from time to time we may publish forward-looking statements relating to such matters as anticipated financial performance, business
prospects, technological developments, product pipelines, clinical trials and research and development activities, the adequacy
of capital reserves and anticipated operating results and cash expenditures, current and potential collaborations, strategic alternatives
and other aspects of our present and future business operations and similar matters that also constitute such forward-looking
statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s
actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among other
things, unforeseen changes in the course of research and development activities and in clinical trials; possible changes in cost,
timing and progress of development, preclinical studies, clinical trials and regulatory submissions; our collaborators’
ability to obtain and maintain regulatory approval of any of our product candidates; possible changes in capital structure, financial
condition, future working capital needs and other financial items; changes in approaches to medical treatment; introduction of
new products by others; success or failure of our current or future collaboration arrangements, risks and uncertainties associated
with possible acquisitions of other technologies, assets or businesses; our ability to obtain additional funds for our operations;
our ability to obtain and maintain intellectual property protection for our technologies and product candidates and our ability
to operate our business without infringing the intellectual property rights of others; our reliance on third parties to conduct
preclinical studies or clinical trials; the rate and degree of market acceptance of any approved product candidates; possible
actions by customers, suppliers, strategic partners, potential strategic partners, competitors and regulatory authorities; compliance
with listing standards of The Nasdaq Capital Market; and those listed under “Risk Factors” below and elsewhere in
this Annual Report.

In
some cases, you can identify forward-looking statements by terminology such as “expect,” “anticipate,”
“estimate,” “plan,” “believe, “could,” “intend,” “predict”,
“may,” “should,” “will,” “would” and words of similar import regarding the Company’s
expectations. Forward-looking statements are only predictions. Actual events or results may differ materially. Although we believe
that our expectations are based on reasonable assumptions within the bounds of our knowledge of our industry, business and operations,
we cannot guarantee that actual results will not differ materially from our expectations. In evaluating such forward-looking statements,
you should specifically consider various factors, including the risks outlined under “Risk Factors.” The discussion
of risks and uncertainties set forth in this Annual Report is not necessarily a complete or exhaustive list of all risks facing
the Company at any particular point in time. We operate in a highly competitive, highly regulated and rapidly changing environment
and our business is in a state of evolution. Therefore, it is likely that new risks will emerge, and that the nature and elements
of existing risks will change, over time. It is not possible for management to predict all such risk factors or changes therein,
or to assess either the impact of all such risk factors on our business or the extent to which any individual risk factor, combination
of factors, or new or altered factors, may cause results to differ materially from those contained in any forward-looking statement.
Except as required by law, we assume no obligation to revise or update any forward-looking statement that may be made from time
to time by us or on our behalf for any reason, even if new information becomes available in the future. Unless the context requires
otherwise or unless otherwise noted, all references in this Annual Report to “Celsion” “the Company”,
“we”, “us”, or “our” are to Celsion Corporation, a Delaware corporation and its wholly owned
subsidiary, CLSN Laboratories, Inc., also a Delaware Corporation.

Trademarks

The
Celsion brand and product names, including but not limited to Celsion® and ThermoDox®, contained in this document are
trademarks, registered trademarks or service marks of Celsion Corporation or its subsidiary in the United States (U.S.) and certain
other countries. This document also contains references to trademarks and service marks of other companies that are the property
of their respective owners.

1

OVERVIEW

Celsion
is an integrated development clinical stage oncology drug company focused on advancing innovative cancer treatments, including
directed chemotherapies, DNA-mediated immunotherapy and RNA-based therapies. Our lead product candidate is ThermoDox®, a proprietary
heat-activated liposomal encapsulation of doxorubicin, currently in a Phase III clinical trial for the treatment of primary liver
cancer (the “OPTIMA Study”). Second in our product pipeline is GEN-1, a DNA-mediated immunotherapy for the localized
treatment of ovarian cancer. These investigational products are based on platform technologies that provide the basis for future
development of a range of therapeutics, largely focused on difficult-to-treat forms of cancer. The first platform technology
is Lysolipid Thermally Sensitive Liposomes, a heat sensitive liposomal based dosage form that is designed to target disease
with known chemotherapeutics in the presence of mild heat. The second platform technology is TheraPlas, a novel nucleic acid-based
investigational candidate under development for local transfection of therapeutic DNA plasmids. Employing these technologies,
we are working to develop and commercialize more efficient, effective and targeted oncology therapies that maximize efficacy while
minimizing side effects common to cancer treatments.

THERMODOX®

Liposomes
are manufactured submicroscopic vesicles consisting of a discrete aqueous central compartment surrounded by a membrane bilayer
composed of naturally occurring lipids. Conventional liposomes have been designed and manufactured to carry drugs and increase
residence time, thus allowing the drugs to remain in the bloodstream for extended periods of time before they are removed from
the body. However, the current existing liposomal formulations of cancer drugs and liposomal cancer drugs under development do
not provide for the immediate release of the drug and the direct targeting of organ specific tumors, two important characteristics
that are required for improving the efficacy of cancer drugs such as doxorubicin. A team of research scientists at Duke University
developed a heat-sensitive liposome that rapidly changes its structure when heated to a threshold minimum temperature of 39.5º
to 42º Celsius. Heating creates channels in the liposome bilayer that allow an encapsulated drug to rapidly disperse into
the surrounding tissue. Through a perpetual, world-wide, exclusive development and commercialization license from Duke University,
we have licensed this novel, heat-activated liposomal technology that is differentiated from other liposomes through its unique
low heat-activated release of encapsulated chemotherapeutic agents.

We
are able to use several available focused-heat technologies, such as radiofrequency ablation (“RFA”), microwave energy
and high intensity focused ultrasound (“HIFU”), to activate the release of drugs from our novel heat sensitive liposomes.

THERMODOX®
for the Treatment of Primary Liver Cancer

Primary
Liver Cancer Overview

Hepatocellular
carcinoma (“HCC”) is one of the most common and deadliest forms of cancer worldwide. It ranks as the third most common
solid tumor cancer. It is estimated that up to 90% of liver cancer patients will die within five years of diagnosis. The incidence
of primary liver cancer is approximately 35,000 cases per year in the U.S., approximately 65,000 cases per year in Europe and
is increasing at approximately 2-3% per year worldwide. Global incidence (per 2017 GLOBALCAN statistics)
is reported at 755,000 cases. The World Health Organization (WHO) has projected that HCC will be the most
prevalent form of cancer by 2030. HCC is commonly diagnosed in patients with longstanding hepatic disease and cirrhosis (primarily
due to hepatitis C in the U.S., Japan and Europe and hepatitis B in Asia).

At
an early stage, the standard first line treatment for liver cancer is surgical resection of the tumor. Up to 80% of patients are
ineligible for surgery or transplantation at time of diagnosis because early stage liver cancer generally has few symptoms and
when finally detected the tumor frequently is too large for surgical resection. There are few alternative treatments, since radiation
therapy and chemotherapy are largely ineffective in treating liver cancer. For tumors generally up to 5 centimeters in diameter,
RFA has emerged as the standard of care treatment which directly destroys the tumor tissue through the application of high temperatures
administered by a probe inserted into the core of the tumor. Local recurrence rates after RFA directly correlate to the size of
the tumor. For tumors 3 cm or smaller in diameter the recurrence rate has been reported to be 10 – 20%; however, for tumors
greater than 3 cm, local recurrence rates of 40% or higher have been observed.

Celsion’s
Approach

While
RFA uses extremely high temperatures (greater than 90° Celsius) to ablate the tumor, it may fail to treat micro-metastases
in the outer margins of the ablation zone because temperatures in the periphery may not be high enough to destroy cancer cells.
Our ThermoDox® treatment approach is designed to utilize the ability of RFA devices to ablate the center of the tumor while
simultaneously thermally activating our ThermoDox® liposome to release its encapsulated doxorubicin to kill any remaining
viable cancer cells throughout the heated region, including the ablation margins. This novel treatment approach is intended to
deliver the drug directly to those cancer cells that survive RFA. This approach is designed to increase the delivery of the doxorubicin
at the desired tumor site while potentially reducing drug exposure distant to the tumor site.

2

The
OPTIMA Study

The
OPTIMA Study represents an evaluation of ThermoDox® in combination with a first line therapy, RFA, for newly diagnosed, intermediate
stage HCC patients. HCC incidence globally is approximately 755,000 new cases per year and is the third largest cancer indication
globally. Approximately 30% of newly diagnosed patients can be addressed with RFA.

On
February 24, 2014, we announced that the United States Food and Drug Administration (the “FDA”) provided clearance
for the OPTIMA Study, which is a pivotal, double-blind, placebo-controlled Phase III trial of ThermoDox®, in combination with
standardized RFA, for the treatment of primary liver cancer. The trial design of the OPTIMA Study is based on the comprehensive
analysis of data from an earlier clinical trial conducted by the Company called the HEAT Study (the “HEAT Study”).
The OPTIMA Study is supported by a hypothesis developed from an overall survival analysis of a large subgroup of 285 patients
from the HEAT Study.

Post-hoc
data analysis from our earlier Phase III HEAT Study suggest that ThermoDox® may substantially improve OS, when compared to
the control group, in patients if their lesions undergo a 45-minute RFA procedure standardized for a lesion greater than 3 cm
in diameter. Data from nine OS sweeps have been conducted since the top line progression free survival (“PFS”) data
from the HEAT Study were announced in January 2013, with each data set demonstrating substantial improvement in clinical benefit
over the control group with statistical significance. On August 15, 2016, we announced updated results from its final retrospective
OS analysis of the data from the HEAT Study (the “HEAT Study subgroup”). These results demonstrated that in a large,
well bounded, subgroup of patients with a single lesion (n=285, 41% of the HEAT Study patients), treatment with a combination
of ThermoDox® and optimized RFA provided an average 54% risk improvement in OS compared to optimized RFA alone. The Hazard
Ratio (“HR”) at this analysis is 0.65 (95% CI 0.45 - 0.94) with a p-value of 0.02. Median OS for the ThermoDox®
subgroup has been reached which translates into a two-year survival benefit over the optimized RFA subgroup (projected to be greater
than 80 months for the ThermoDox® plus optimized RFA subgroup compared to less than 60 months projection for the optimized
RFA only subgroup).

While
this information should be viewed with caution since it is based on a retrospective analysis of a subgroup, we also conducted
additional analyses that further strengthen the evidence for the HEAT Study subgroup. We commissioned an independent computational
model at the University of South Carolina Medical School. The results unequivocally indicate that longer RFA heating times correlate
with significant increases in doxorubicin concentration around the RFA treated tissue. In addition, we conducted a prospective
preclinical study in 22 pigs using two different manufacturers of RFA and human equivalent doses of ThermoDox® that clearly
support the relationship between increased heating duration and doxorubicin concentrations.

The
OPTIMA Study was designed with extensive input from globally recognized HCC researchers and expert clinicians. The FDA also
provided formal written feedback to the Company on the study protocol and trial design. The OPTIMA Study was designed
to enroll up to 550 patients globally at approximately 65 clinical sites in the U.S., Canada, European Union (EU), China and other
countries in the Asia-Pacific region and will evaluate ThermoDox® in combination with standardized RFA, which will require
a minimum of 45 minutes across all investigators and clinical sites for treating lesions three to seven centimeters, versus standardized
RFA alone. The primary endpoint for this clinical trial is overall survival (“OS”), and the secondary endpoints are
progression free survival and safety. The statistical plan calls for two interim efficacy analyses by an independent Data Monitoring
Committee (“DMC”).

We
completed enrollment of 556 patients in the Phase III OPTIMA Study in August 2018. Data for the study will be reviewed as it matures
with up to two interim analyses - the first analysis was conducted in the second half of 2019 and the second analysis
is expected to be conducted in mid-2020. We expect that the final efficacy analysis, if necessary, will be completed in early
2021. ThermoDox® has received U.S. FDA Fast Track Designation and has been granted orphan drug designation for primary liver
cancer in both the U.S. and the EU. Additionally, the U.S. FDA has provided ThermoDox® with a 505(b)(2) registration pathway.
Subject to a successful trial, the OPTIMA Study has been designed to support registration in all key primary liver cancer markets.
We fully expect to submit registrational applications in the U.S., Europe and China. We expect to submit, and we believe that
applications will be accepted in South Korea, Taiwan and Vietnam, three other significant markets for ThermoDox® if it were
to receive approval in Europe, China or the U.S.

3

On
December 18, 2018, we announced that the DMC for the OPTIMA Study completed its last scheduled review of all patients enrolled
in the trial and unanimously recommended that the OPTIMA Study continue according to protocol to its final data readout. The DMC’s
recommendation was based on the committee’s assessment of safety and data integrity of all patients randomized in
the trial as of October 4, 2018. The DMC reviewed study data at regular intervals throughout the patient enrollment period, with
the primary responsibilities of ensuring the safety of all patients enrolled in the study, the quality of the data collected,
and the continued scientific validity of the study design. As part of its review of all 556 patients enrolled into the trial,
the DMC evaluated a quality matrix relating to the total clinical data set, confirming the timely collection of data, that all
data are current as well as other data collection and quality criteria.

On
August 5, 2019, the Company announced that the prescribed number of OS events had been reached for the first prespecified interim
analysis of the OPTIMA Phase III Study. Following preparation of the data, the first interim analysis was conducted by the DMC
on November 1, 2019. This timeline was consistent with the Company’s stated expectations and is necessary to provide a full
and comprehensive data set that may represent the potential for a successful trial outcome. In accordance with the statistical
plan, this initial interim analysis has a target of 118 events, or 60% of the total number required for the final analysis. At
the time of the data cutoff, the Company received reports of 128 events. The hazard ratio for success at 128 events is approximately
0.63, which represents a 37% reduction in the risk of death compared with RFA alone and is consistent with the 0.65 hazard ratio
that was observed in the prospective HEAT Study subgroup, which demonstrated a two-year overall survival advantage and a median
time to death of more than seven and a half years.

On
August 13, 2019, the Company announced that results from an independent analysis of the Company’s ThermoDox® HEAT
Study conducted by the National Institutes of Health (NIH) were published in the peer-reviewed publication, Journal of Vascular
and Interventional Radiology. The analysis was conducted by the intramural research program of the NIH and the NIH Center for
Interventional Oncology (CIO), with the full data set from the Company’s HEAT Study. The analysis evaluated the full data
set to determine if there was a correlation between baseline tumor volume and radiofrequency ablation (RFA) heating time (minutes/tumor
volume in milliliters), with or without ThermoDox® treatment, for patients with HCC. The NIH analysis was conducted under
the direction of Dr. Bradford Wood, MD, Director, NIH Center for Interventional Oncology and Chief, NIH Clinical Center Interventional
Radiology.

The
article titled, “RFA Duration Per Tumor Volume May Correlate With Overall Survival in Solitary Hepatocellular Carcinoma
Patients Treated With RFA Plus Lyso-thermosensitive Liposomal Doxorubicin,” discussed the NIH analysis of results
from 437 patients in the HEAT Study (all patients with a single lesion representing 62.4% of the study population). The key finding
was that increased RFA heating time per tumor volume significantly improved overall survival (OS) in patients with single-lesion
HCC who were treated with RFA plus ThermoDox®, compared to patients treated with RFA alone. A one-unit increase in RFA duration
per tumor volume was shown to result in about a 20% improvement in OS for patients administered ThermoDox®, compared to RFA
alone. The authors conclude that increasing RFA heating time in combination with ThermoDox® significantly improves OS and
establishes an improvement of over two years versus the control arm when the heating time per milliliter of tumor is greater than
2.5 minutes. This finding is consistent with the Company’s own results, which defined the optimized RFA procedure as a 45-minute
treatment for tumors with a diameter of 3 centimeters. Thus, the NIH analysis lends support to the hypothesis underpinning the
OPTIMA Study.

On
August 27, 2019, the Company announced that a study from a single site in China titled “Thermosensitive liposomal
doxorubicin plus radiofrequency ablation increased tumor destruction and improved survival in patients with medium and large hepatocellular
carcinoma: A randomized, double-blinded, dummy-controlled clinical trial in a single center” has been published
in the Journal of Cancer Research and Therapeutics. These data were generated as part of the Phase III HEAT (Hepatocellular Carcinoma
Study of RFA and ThermoDox®) Study sponsored by Celsion. The data from this single site at the Peking University Cancer Hospital
and Institute in Beijing show an OS improvement of 22.5 months in patients with 3-7 cm unresectable hepatocellular
carcinoma (HCC) tumors receiving combined radiofrequency ablation (RFA) and ThermoDox®, compared with the use of RFA alone.

4

In
this study, patients received 50 mg/m2 of ThermoDox® or placebo, plus RFA for 45 minutes or longer. Patients were followed
for 11 to 80 months (average: 49.1 ± 24.8 months), with 18 of 22 patients completing the study. The mean OS for the ThermoDox®
plus RFA group was 68.5 ± 7.2 months, which was significantly greater than the placebo plus RFA group (46.0 ± 10.6
months, pValue = 0.045). At the end of the follow-up period, the percentage of patients alive after 1, 3 and 5 years were as follows:

ThermoDox +
RFA

RFA Alone

% of patients alive at 1 year

90.0

%

87.5

%

% of patients alive at 3 years

90.0

%

50.0

%

% of patients alive at 5 years

77.1

%

37.5

%

The
publication can be found in the Journal of Cancer Research and Therapeutics | Year: 2019 | Volume: 15 | Issue: 4 | Page
773 – 783. The authors are Yang W, Lee JC, Chen MH, Zhang ZY, Bai XM, Yin SS, et al. from the Departments of Ultrasound
and Radiology, Key Laboratory of Carcinogenesis and Translational Research (Ministry of Education), Peking University Cancer Hospital
and Institute in Beijing. Professor Min-Hua Chen was a principal investigator in Celsion’s Phase III HEAT Study, from which
these data are derived, and is also a principal investigator in the Company’s ongoing Phase III OPTIMA Study for the treatment
of primary liver cancer with ThermoDox® plus standardized RFA.

On
November 4, 2019, the Company announced that the DMC unanimously recommended the OPTIMA Study continue according to protocol.
The recommendation was based on a review of blinded safety and data integrity from 556 patients enrolled in the Company’s
multinational, double-blind, placebo-controlled pivotal Phase III OPTIMA Study with ThermoDox®.

The
DMC’s pre-planned interim efficacy review followed 128 patient events, or deaths, which occurred in August 2019. Data presented
demonstrated that PFS and OS data appear to be tracking with patient data observed at a similar time point in the Company’s
subgroup of patients followed prospectively in the earlier Phase III HEAT Study, upon which the OPTIMA Study is based.

The
data review demonstrated the following:

●

The
OPTIMA Study patient demographics and risk factors are consistent with what the Company observed in the HEAT Study subgroup
with all data quality metrics meeting expectations.

●

Median
PFS for the OPTIMA Study reached 17 months as of August 2019. These blinded data compare favorably with 16 months median PFS
for all 285 patients in the HEAT Study subgroup of patients treated with RFA >45 minutes.

●

Median
OS for the OPTIMA Study has not been reached as of August 5, 2019, however median OS appears to be consistent with the HEAT
Study subgroup of patients treated with RFA >45 minutes and followed prospectively for overall survival.

●

The
OPTIMA Study has lost only 4 patients to follow-up from the initiation of the trial in September 2014 through August 2019
while the trial design allows for 3% risk for loss per year, which at this point would have exceeded 60 patients.

While
the Company has not unblinded the study to report a hazard ratio, PFS and OS are tracking similarly to the subgroup of patients
who received more than 45 minutes of RFA in our HEAT Study and followed prospectively for more than three years. This subgroup
in the HEAT Study demonstrated a 2-year overall survival advantage and a median time to death of more than 7 ½ years. This
tracking appears to bode well for study success at the second of two pre-planned interim efficacy analysis which
is intended after a minimum of 158 patient deaths and is projected to occur during the second quarter of 2020. The hazard ratio
for success at 158 events is 0.70 with a P-value of 0.022 This is below the hazard ratio of 0.65, P-value = 0.02
observed for the HEAT Study subgroup of patients treated with RFA > 45 minutes.

IMMUNO-ONCOLOGY
Program

On
June 20, 2014, we completed the acquisition of substantially all of the assets of EGEN, a private company located in Huntsville,
Alabama. Pursuant to the Asset Purchase Agreement, CLSN Laboratories acquired all of EGEN’s right, title and interest in
and to substantially all of the assets of EGEN, including cash and cash equivalents, patents, trademarks and other intellectual
property rights, clinical data, certain contracts, licenses and permits, equipment, furniture, office equipment, furnishings,
supplies and other tangible personal property. A key asset acquired from EGEN was the TheraPlas technology platform and the first
drug candidate developed from it is GEN-1.

5

THERAPLAS
Technology Platform

TheraPlas
is a technology platform for the delivery of DNA and mRNA therapeutics via synthetic non-viral carriers and is capable of providing
cell transfection for double-stranded DNA plasmids and large therapeutic RNA segments such as mRNA. There are two components of
the TheraPlas system, a plasmid DNA or mRNA payload encoding a therapeutic protein, and a delivery system. The delivery system
is designed to protect the DNA/RNA from degradation and promote trafficking into cells and through intracellular compartments.
We designed the delivery system of TheraPlas by chemically modifying the low molecular weight polymer to improve its gene transfer
activity without increasing toxicity. We believe that TheraPlas may be a viable alternative to current approaches to gene
delivery due to several distinguishing characteristics, including enhanced molecular versatility that allows for complex modifications
to potentially improve activity and safety.

The
design of the TheraPlas delivery system is based on molecular functionalization of polyethyleneimine (PEI), a cationic delivery
polymer with a distinct ability to escape from the endosomes due to heavy protonation. The transfection activity and toxicity
of PEI is tightly coupled to its molecular weight therefore the clinical application of PEI is limited. We have used molecular
functionalization strategies to improve the activity of low molecular weight PEIs without augmenting their cytotoxicity. In one
instance, chemical conjugation of a low molecular weight branched BPEI1800 with cholesterol and polyethylene glycol (PEG) to form
PEG-PEI-Cholesterol (PPC) dramatically improved the transfection activity of BPEI1800 following in vivo delivery. Together, the
cholesterol and PEG modifications produced approximately 20-fold enhancement in transfection activity. Biodistribution studies
following intraperitoneal or subcutaneous administration of DNA/PPC nanocomplexes showed DNA delivery localized primarily at the
injection site with only small amount escaping into the systemic circulation. PPC is the delivery component of our lead TheraPlas
product, GEN-1, which is in clinical development for the treatment ovarian cancer and in preclinical development for the treatment
of glioblastoma. The PPC manufacturing process has been scaled up from bench scale (1-2 g) to 0.6Kg, and several current Good
Manufacturing Practice, (“cGMP”) lots have been produced with reproducible quality.

We
believe that TheraPlas has emerged as a viable alternative to
current approaches due to several distinguishing characteristics such as strong molecular versatility that may allow for
complex modifications to potentially improve activity and safety with little difficulty. The biocompatibility of these polymers
reduces the risk of adverse immune response, thus allowing for repeated administration. Compared to naked DNA or cationic lipids,
TheraPlas is generally safer, more efficient, and cost effective. We believe that these advantages place Celsion in strong position
to capitalize on this technology platform.

Ovarian
Cancer Overview

Ovarian
cancer is the most lethal of gynecological malignancies among women with an overall five-year survival rate of 45%. This poor
outcome is due in part to the lack of effective prevention and early detection strategies. There were approximately 22,000 new
cases of ovarian cancer in the U.S. in 2014 with an estimated 14,000 deaths. Mortality rates for ovarian cancer declined very
little in the last forty years due to the unavailability of detection tests and improved treatments. Most women with ovarian cancer
are not diagnosed until Stages III or IV, when the disease has spread outside the pelvis to the abdomen and areas beyond causing
swelling and pain, where the five-year survival rates are 25 - 41 percent and 11 percent, respectively. First-line chemotherapy
regimens are typically platinum-based combination therapies. Although this first line of treatment has an approximate 80 percent
response rate, 55 to 75 percent of women will develop recurrent ovarian cancer within two years and ultimately will not respond
to platinum therapy. Patients whose cancer recurs or progresses after initially responding to surgery and first-line chemotherapy
have been divided into one of the two groups based on the time from completion of platinum therapy to disease recurrence or progression.
This time period is referred to as platinum-free interval. The platinum-sensitive group has a platinum-free interval of longer
than six months. This group generally responds to additional treatment with platinum-based therapies. The platinum-resistant group
has a platinum-free interval of shorter than six months and is resistant to additional platinum-based treatments. Pegylated liposomal
doxorubicin, topotecan, and Avastin are the only approved second-line therapies for platinum-resistant ovarian cancer. The overall
response rate for these therapies is 10 to 20 percent with median overall survival of eleven to twelve months. Immunotherapy is
an attractive novel approach for the treatment of ovarian cancer particularly since ovarian cancers are considered immunogenic
tumors. IL-12 is one of the most active cytokines for the induction of potent anti-cancer immunity acting through the induction
of T-lymphocyte and natural killer cell proliferation. The precedence for a therapeutic role of IL-12 in ovarian cancer is based
on epidemiologic and preclinical data.

6

GEN-1

GEN-1
is a DNA-based immunotherapeutic product candidate for the localized treatment of ovarian cancer by intraperitoneally administering
an Interleukin-12 (“IL-12”) plasmid formulated with our proprietary TheraPlas delivery system. In this DNA-based approach,
the immunotherapy is combined with a standard chemotherapy drug, which can potentially achieve better clinical outcomes than with
chemotherapy alone. We believe that increases in IL-12 concentrations at tumor sites for several days after a single administration
could create a potent immune environment against tumor activity and that a direct killing of the tumor with concomitant use of
cytotoxic chemotherapy could result in a more robust and durable antitumor response than chemotherapy alone. We believe the rationale
for local therapy with GEN-1 is based on the following.

●

Loco-regional
production of the potent cytokine IL-12 avoids toxicities and poor pharmacokinetics associated with systemic delivery of recombinant
IL-12;

●

Persistent
local delivery of IL-12 lasts up to one week and dosing can be repeated; and

●

Potential
for long-term maintenance therapy.

OVATION
I Study

In
February 2015, we announced that the FDA accepted, without objection, the Phase Ib dose-escalation clinical trial of GEN-1 in
combination with the standard of care in neoadjuvant ovarian cancer (the “OVATION I Study”). On September 30, 2015,
we announced enrollment of the first patient in the OVATION I Study. The OVATION I Study was designed (i) to identify a safe,
tolerable and potentially therapeutically active dose of GEN-1 by recruiting and maximizing an immune response and (ii) to enroll
three to six patients per dose level to evaluate safety and efficacy and attempt to define an optimal dose for a follow-on Phase
I/II study. In addition, the OVATION I Study establishes a unique opportunity to assess how cytokine-based compounds such as GEN-1
directly affect ovarian cancer cells and the tumor microenvironment in newly diagnosed patients. The study was designed to characterize
the nature of the immune response triggered by GEN-1 at various levels of the patients’ immune system, including:

●

Infiltration
of cancer fighting T-cell lymphocytes into primary tumor and tumor microenvironment including peritoneal cavity, which is
the primary site of metastasis of ovarian cancer;

●

Changes
in local and systemic levels of immuno-stimulatory and immunosuppressive cytokines associated with tumor suppression and growth,
respectively; and

●

Expression
profile of a comprehensive panel of immune related genes in pre-treatment and GEN-1-treated tumor tissue.

We initiated the OVATION I Study at four clinical sites at the University
of Alabama at Birmingham, Oklahoma University Medical Center, Washington University in St. Louis and the Medical College of Wisconsin.
During 2016 and 2017, we announced data from the first fourteen patients in the OVATION I Study who completed treatment. On October
3, 2017 we announced final clinical and translational research data from the OVATION Study.

GEN-1 plus standard chemotherapy produced positive clinical results,
with no dose limiting toxicities and positive dose dependent efficacy signals which correlate well with positive surgical outcomes.
The OVATION I Study evaluated escalating doses of GEN-1 (36 mg/m2, 47 mg/m2, 61 mg/m2 and 79 mg/m2) administered intraperitoneally
in combination with three cycles of neoadjuvant chemotherapy prior to interval debulking surgery, followed by three cycles of NAC
in the treatment of newly diagnosed patients with Stage III/IV ovarian cancer.

In
this Phase IB dose-escalation study, the 14 patients who were evaluable for response demonstrated median PFS of 21 months in patients
treated per protocol and 17.1 months for the intent-to-treat population (n=18) for all dose cohorts, including three patients
who dropped out of the study after 13 days or less, and two patients who did not receive full NAC and GEN-1 cycles. In addition,
100% of patients administered NAC plus the two higher doses of GEN-1 experienced an objective tumor response (defined as a partial
or complete response) compared to only 60% of patients given the two lower doses. Pathological changes were assessed as part of
the study, with the density of markers measured in tissue sections assessed via immunohistochemistry staining. Among patients
administered the high doses of GEN-1 (n=8), pre-treatment to post-treatment reductions in key biomarkers were observed (FoxP3
-62.5%; IDO-1 -60%; PD-1 -62.5%; PD-L1 -37.5%). Reductions were also observed in patients administered the lower doses of GEN-1
(n=4) for all but one of the four key biomarkers (FoxP3 -40%; IDO-1 -40%; PD-1 +25%; PD-L1 -37.5%). The ratio of CD8+ cells to
the four key immunosuppressive cell signals increased following treatment in 60 - 80% of patients.

7

Dose-limiting
toxicity was not reached in the OVATION I Study.

OVATION
2 Study

On
November 13, 2017, the Company filed its Phase I/II clinical trial protocol with the U.S. Food and Drug Administration for GEN-1
for the localized treatment of ovarian cancer. The protocol is designed with a single dose escalation phase to 100 mg/m²
to identify a safe and tolerable dose of GEN-1 while maximizing an immune response. The Phase I portion of the study will be followed
by a continuation at the selected dose in 130 patients randomized Phase II study.

In
the OVATION 2 Study, patients in the GEN-1 treatment arm will receive GEN-1 plus chemotherapy pre- and post-interval debulking
surgery. The OVATION 2 Study will include up to 130 patients with Stage III/IV ovarian cancer, with 12 to 15 patients in the Phase
I portion and up to 118 patients in Phase II. The study is 80% powered to show a 33% improvement in the primary endpoint, PFS,
when comparing GEN-1 with neoadjuvant + adjuvant chemotherapy versus neoadjuvant + adjuvant chemotherapy alone. The PFS primary
analysis will be conducted after at least 80 events have been observed or after all patients have been followed for at least 16
months, whichever is later.

Developed
with extensive input from the Company’s Medical Advisory Board, the OVATION 2 Study builds on promising clinical and translational
research data from the Phase IB dose-escalation OVATION I Study, in which enrolled patients received escalating weekly doses of
GEN-1 up to 79 mg/m² for a total of eight treatments in combination with NACT, followed by IDS. In addition to exploring
a higher dose of GEN-1 in the OVATION 2 study, patients will continue to receive GEN-1 after their IDS in combination with adjuvant
chemotherapy.

On
November 5, 2019, the Company announced that the independent Data Safety Monitoring Board (DSMB) completed its safety review of
data from the first eight patients enrolled in the ongoing Phase I/II OVATION 2 Study. Based on the DSMB’s recommendation,
the study will continue as planned and the Company will proceed with completing enrollment in the Phase I portion of the trial.

The
latest DSMB review of GEN-1 at 100 mg/m² (in November 2019 and February 2020) has confirmed that there were no apparent dose
limiting toxicities detected in any of the patients dosed with GEN-1 and that intraperitoneal administration is well tolerated
even when given with standard NACT. Of the fifteen patients treated in the Phase I portion of the OVATION 2 Study, nine patients
were treated with GEN-1 plus NACT and six patients were treated with NACT only.

In
March 2020, the Company announced highly encouraging initial clinical data from the first 15 patients enrolled in the ongoing
Phase I/II OVATION 2 Study for patients newly diagnosed with Stage III and IV ovarian cancer. The OVATION 2 Study combines GEN-1,
the Company’s IL-12 gene-mediated immunotherapy, with standard-of-care neoadjuvant chemotherapy (NACT). Following NACT,
patients undergo interval debulking surgery (IDS), followed by three additional cycles of chemotherapy.

GEN-1
plus standard NACT produced positive dose-dependent efficacy results, with no dose-limiting toxicities, which correlates well
with successful surgical outcomes as summarized below:

●

Of
the 15 patients treated in the Phase I portion of the OVATION 2 Study, nine patients were treated with GEN-1 at a dose of
100 mg/m² plus NACT and six patients were treated with NACT only. All 15 patients had successful resections of their
tumors, with seven out of nine patients (78%) in the GEN-1 treatment arm having an R0 resection, which indicates a microscopically
margin-negative resection in which no gross or microscopic tumor remains in the tumor bed. Only three out of six patients
(50%) in the NACT only treatment arm had a R0 resection.

8

●

When
combining these results with the surgical resection rates observed in the Company’s prior Phase Ib dose-escalation trial
(the OVATION 1 Study), a population of patients with inclusion criteria identical to the OVATION 2 Study, the data reflect
the strong dose-dependent efficacy of adding GEN-1 to the current standard of care NACT:

Because
of the risks and uncertainties discussed in this Annual Report, among others, we are unable to estimate the duration and completion
costs of our research and development projects or when, if ever, and to what extent we will receive cash inflows from the commercialization
and sale of a product. In addition, with the recent outbreak of the Covid-19 pandemic, we are still evaluating the impact
that the pandemic will have on our trials and on our ability to timely develop our product candidates. Our inability to complete
any of our research and development activities, preclinical studies or clinical trials in a timely manner or our failure to enter
into collaborative agreements when appropriate could significantly increase our capital requirements and could adversely impact
our liquidity. While our estimated future capital requirements are uncertain and could increase or decrease as a result of many
factors, including the extent to which we choose to advance our research, development activities, preclinical studies and clinical
trials, or if we are in a position to pursue manufacturing or commercialization activities, we will need significant additional
capital to develop our product candidates through development and clinical trials, obtain regulatory approvals and manufacture
and commercialize approved products, if any. We do not know whether we will be able to access additional capital when needed or
on terms favorable to us or our stockholders. Our inability to raise additional capital, or to do so on terms reasonably acceptable
to us, would jeopardize the future success of our business.

As
a clinical stage biopharmaceutical company, our business and our ability to execute our strategy to achieve our corporate goals
are subject to numerous risks and uncertainties. Material risks and uncertainties relating to our business and our industry are
described in “Part I, Item 1A. Risk Factors” in this Annual Report.

BUSINESS
STRATEGY AND DEVELOPMENT PLAN

We
have not generated and do not expect to generate any revenue from product sales in the next several years, if at all. An element
of our business strategy has been to pursue, as resources permit, the research and development of a range of product candidates
for a variety of indications. We may also evaluate licensing cancer products from third parties for cancer treatments to expand
our current product pipeline. This is intended to allow us to diversify the risks associated with our research and development
expenditures. To the extent we are unable to maintain a broad range of product candidates, our dependence on the success of one
or a few product candidates would increase and results such as those announced in relation to the HEAT study on January 31, 2013
will have a more significant impact on our financial prospects, financial condition and market value. We may also consider and
evaluate strategic alternatives, including investment in, or acquisition of, complementary businesses, technologies or products.
As demonstrated by the HEAT Study results, drug research and development is an inherently uncertain process and there is a high
risk of failure at every stage prior to approval. The timing and the outcome of clinical results are extremely difficult to predict.
The success or failure of any preclinical development and clinical trial can have a disproportionately positive or negative impact
on our results of operations, financial condition, prospects and market value.

Our
current business strategy includes the possibility of entering into collaborative arrangements with third parties to complete
the development and commercialization of our product candidates. In the event that third parties take over the clinical trial
process for one or more of our product candidates, the estimated completion date would largely be under the control of that third
party rather than us. We cannot forecast with any degree of certainty which proprietary products or indications, if any, will
be subject to future collaborative arrangements, in whole or in part, and how such arrangements would affect our development plan
or capital requirements. We may also apply for subsidies, grants or government or agency-sponsored studies that could reduce our
development costs.

9

We
had $16.7 million in cash, investments, interest receivable and deferred income tax asset as of December 31, 2019. During
the first quarter of 2020, we raised an additional $6.4 million in capital under the 2019 Aspire Purchase Agreement and from the
February 2020 Registered Direct Offering (as defined below). Given our development plans, we anticipate cash resources will be
sufficient to fund our operations and financial commitments through mid-2021. In addition, the Company has approximately
$15 million available under the Capital on Demand Agreement with JonesTrading International Services LLC. On March 5, 2020, we
announced the termination of the 2019 Aspire Purchase Agreement. Other than the Capital on Demand Agreement with Jones Trading
that provides us the ability to sell equity securities in the future, we have no other committed sources of additional capital.

As
a result of the risks and uncertainties discussed in this Annual Report, among others, we are unable to estimate the duration
and completion costs of our research and development projects or when, if ever, and to what extent we will receive cash inflows
from the commercialization and sale of a product if one of our product candidates receives regulatory approval for marketing,
if at all. Our inability to complete any of our research and development activities, preclinical studies or clinical trials in
a timely manner or our failure to enter into collaborative agreements when appropriate could significantly increase our capital
requirements and could adversely impact our liquidity. While our estimated future capital requirements are uncertain and could
increase or decrease as a result of many factors, including the extent to which we choose to advance our research and development
activities, preclinical studies and clinical trials, or whether we are in a position to pursue manufacturing or commercialization
activities, we will need significant additional capital to develop our product candidates through development and clinical trials,
obtain regulatory approvals and manufacture and commercialize approved products, if any. We do not know whether we will be able
to access additional capital when needed or on terms favorable to us or our stockholders. Our inability to raise additional capital,
or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business. See Item 7 - Management’s
Discussion and Analysis of Financial Condition and Results of Operations for additional information regarding the Company’s
financial condition, liquidity and capital resources.

RESEARCH
AND DEVELOPMENT EXPENDITURES

We
are engaged in a limited amount of research and development in our own facilities and have sponsored research programs in partnership
with various research institutions, including the National Institutes of Health, the National Cancer Institute and Duke University.
We are currently, with minimal cash expenditures, sponsoring clinical and pre-clinical research at the University of Oxford, University
of Utrecht, Oklahoma State University and the Children’s Hospital Research Institute. The majority of the spending in research
and development is for the funding of ThermoDox® and GEN-1 clinical trials. Research and development expenses were approximately
$13.1 million and $11.9 million for the years ended December 31, 2019 and 2018, respectively. See Item 7 - Management’s
Discussion and Analysis of Financial Condition and Results of Operations for additional information regarding expenditures
related to our research and development programs.

GOVERNMENT
REGULATION

Government
authorities in the U.S., at the federal, state and local level, and in other countries extensively regulate, among other things,
the research, development, testing, quality control, approval, manufacturing, labeling, post-approval monitoring and reporting,
recordkeeping, packaging, promotion, storage, advertising, distribution, marketing and export and import of pharmaceutical products
such as those we are developing. The process of obtaining regulatory approvals and the subsequent compliance with appropriate
federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources

Regulation
in the United States

In
the United States, the FDA regulates drugs and biological products under the Federal Food, Drug, and Cosmetic Act (FDCA), the
Public Health Service Act (PHSA) and implementing regulations. Failure to comply with the applicable FDA requirements at any time
pre- or post-approval may result in a delay of approval or administrative or judicial sanctions. These sanctions could include
the FDA’s imposition of a clinical hold on trials, refusal to approve pending applications, withdrawal of an approval, issuance
of warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution,
injunctions, fines, civil penalties or criminal prosecution.

Research
and Development

The
vehicle by which FDA approves a new pharmaceutical product for sale and marketing in the U.S. is a New Drug Application (“NDA”)
or a Biologics License Application (BLA). A new drug or biological product cannot be marketed in the United States without FDA’s
approval of an NDA/BLA. The steps ordinarily required before a new drug can be marketed in the U.S. include (a) completion of
pre-clinical and clinical studies; (b) submission and FDA acceptance of an Investigational New Drug application (IND), which must
become effective before human clinical trials may commence; (c) completion of adequate and well-controlled human clinical trials
to establish the safety and efficacy of the product to support each of its proposed indications; (d) submission and FDA acceptance
of an NDA/BLA; (e) completion of an FDA inspection and potential audits of the facilities where the drug or biological product
is manufactured to assess compliance with the current good manufacturing practices (cGMP) and to assure adequate identity, strength,
quality, purity, and potency; and (e) FDA review and approval of the NDA/BLA.

10

Pre-clinical
tests include laboratory evaluations of product chemistry, toxicity, formulation and stability, as well as animal studies, to
assess the potential safety and efficacy of the product. Pre-clinical safety tests must be conducted by laboratories that comply
with FDA regulations regarding good laboratory practice. The results of pre-clinical tests are submitted to the FDA as part of
an IND and are reviewed by the FDA before the commencement of human clinical trials. Submission of an IND will not necessarily
result in FDA authorization to commence clinical trials, and the absence of FDA objection to an IND does not necessarily mean
that the FDA will ultimately approve an NDA/BLA or that a product candidate otherwise will come to market.

Clinical
trials involve the administration of the investigational product to human subjects under the supervision of a qualified principal
investigator. Clinical trials must be conducted in accordance with good clinical practices under protocols submitted to the FDA
as part of an IND and with patient informed consent. Also, each clinical trial must be approved by an Institutional Review Board
(IRB), and is subject to ongoing IRB monitoring.

Clinical
trials are typically conducted in three sequential phases, but the phases may overlap or be combined. Phase I clinical trials
may be conducted in patients or healthy volunteers to evaluate the product’s safety, dosage tolerance and pharmacokinetics
and, if possible, seek to gain an early indication of its effectiveness. Phase II clinical trials usually involve controlled trials
in a larger but still relatively small number of subjects from the relevant patient population to evaluate dosage tolerance and
appropriate dosage; identify possible short-term adverse effects and safety risks; and provide a preliminary evaluation of the
efficacy of the drug for specific indications. Phase III clinical trials are typically conducted in a significantly larger patient
population and are intended to further evaluate safety and efficacy, establish the overall risk-benefit profile of the product,
and provide an adequate basis for physician labeling.

In
certain circumstances, a therapeutic product candidate being studied in clinical trials may be made available for treatment of
individual patients. Pursuant to the 21st Century Cures Act (Cures Act), the manufacturer of an investigational product
for a serious disease or condition is required to make available, such as by posting on its website, its policy on evaluating
and responding to requests for individual patient access to such investigational product.

There
can be no assurance that any of our clinical trials will be completed successfully within any specified time period or at all.
Either the FDA or we may suspend clinical trials at any time on various grounds, including among other things, if we, the FDA,
our independent DMC, or the IRB conclude that clinical subjects are being exposed to an unacceptable health risk. The FDA inspects
and reviews clinical trial sites, informed consent forms, data from the clinical trial sites (including case report forms and
record keeping procedures) and the performance of the protocols by clinical trial personnel to determine compliance with good
clinical practices. The conduct of clinical trials is complex and difficult, and there can be no assurance that the design or
the performance of the pivotal clinical trial protocols of any of our current or future product candidates will be successful.

The results of pre-clinical studies and clinical trials, if successful,
are submitted to FDA in the form of an NDA or BLA. Among other things, the FDA reviews an NDA to determine whether the product
is safe and effective for its intended use and reviews a BLA to determine whether the product is safe, pure, and potent, and in
each case, whether the product candidate is being manufactured in accordance with cGMP. The testing, submission, and approval process
requires substantial time, effort, and financial resources, including substantial application user fees and annual product and
establishment user fees. There can be no assurance that any approval will be granted for any product at any time, according to
any schedule, or at all. The FDA may refuse to accept or approve an application if it determines that applicable regulatory criteria
are not satisfied. The FDA may also require additional testing for safety and efficacy. Even, if regulatory approval is granted,
the approval will be limited to specific indications. There can be no assurance that any of our current product candidates will
receive regulatory approvals for marketing or, if approved, that approval will be for any or all of the indications that we request.

The
FDA has agreed to certain performance goals in the review of NDAs and BLAs. The FDA has 60 days from its receipt of an NDA or
BLA to determine whether the application will be accepted for filing based on the agency’s threshold determination that
it is sufficiently complete to permit substantive review. Once the NDA/BLA is accepted for filing, most standard reviews applications
are completed within ten months of filing; most priority review applications are reviewed within six months of filing. Priority
review are applied to a product candidate that the FDA determines has the potential to treat a serious or life-threatening condition
and, if approved, would be a significant improvement in safety or effectiveness compared to available therapies. The review process
for both standard and priority review may be extended by the FDA for three additional months to consider certain late-submitted
information, or information intended to clarify information already provided in the submission.

11

Section
505(b)(2) NDAs

As
an alternative path to FDA approval for modifications to formulations or uses of drugs previously approved by the FDA, an applicant
may submit an NDA under Section 505(b)(2) of the FDCA. Section 505(b)(2) was enacted as part of the Hatch-Waxman Amendments. A
Section 505(b)(2) NDA is an application that contains full reports of investigations of safety and effectiveness, but where at
least some of the information required for approval comes from studies not conducted by, or for, the applicant and for which the
applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. This
type of application permits reliance for such approvals on literature or on an FDA finding of safety, effectiveness or both for
an approved drug product.

As
such, under Section 505(b)(2), the FDA may rely, for approval of an NDA, on data not developed by the applicant. The FDA may also
require companies to perform additional studies or measurements, including clinical trials, to support the change from the approved
branded reference drug. The FDA may then approve the new product candidate for the new indication sought by the 505(b)(2) applicant.

FDA
Regulations Specific to Gene-Based Products

The
Food and Drug Administration (FDA) regulates gene-based products as biological products. Biological products intended for therapeutic
use may be regulated by either the Center for Biologics Evaluation & Research (CBER) or the Center for Biologics Evaluation
& Research (CDER). Gene-based products are subject to extensive regulation under the FDCA, the PHSA, and their implementing
regulations. Each clinical trial of investigational gene therapies must be reviewed and approved by the Institutional Biosafety
Committee (IBC) for each clinical site. IBCs were established under the National Institutes of Health (NIH) Guidelines for Research
Involving Recombinant or Synthetic Nucleic Acid Molecules to provide local review and oversight of nearly all forms of research
utilizing recombinant or synthetic nucleic acid molecules. The IBC assesses biosafety issues, specifically, safety practices and
containment procedures, related to the investigational product and clinical study. Compliance with the NIH Guidelines is mandatory
for investigators at institutions receiving NIH funds for research involving recombinant DNA, however many companies and other
institutions not otherwise subject to the NIH Guidelines voluntarily follow them. Such trials remain subject to FDA and other
clinical trial regulations, and only after FDA, IBC, and other relevant approvals are in place can these protocols proceed.

Additional
Controls for Biological Products

To
help reduce the increased risk of the introduction of adventitious agents, the PHSA emphasizes the importance of manufacturing
controls for products whose attributes cannot be precisely defined. The PHSA also provides authority to the FDA to immediately
suspend licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages
and critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or
spread of communicable diseases in the United States and between states.

After
a BLA is approved, the biological product may be subject to official lot release as a condition of approval. As part of the manufacturing
process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.
If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together
with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s
tests performed on the lot. The FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines,
before releasing the lots for distribution by the manufacturer.

In
addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness
of biological products. As with drugs, after approval of biological products, manufacturers must address any safety issues that
arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.

Expedited
Development and Review Programs

The
FDA has various programs, including Fast Track, priority review, accelerated approval and breakthrough therapy, which are intended
to expedite or simplify the process for reviewing product candidates, or provide for the approval of a product candidate on the
basis of a surrogate endpoint. Even if a product candidate qualifies for one or more of these programs, the FDA may later decide
that the product candidate no longer meets the conditions for qualification or that the time period for FDA review or approval
will be lengthened. Generally, product candidates that are eligible for these programs are those for serious or life-threatening
conditions, those with the potential to address unmet medical needs and those that offer meaningful benefits over existing treatments.
For example, Fast Track is a process designed to facilitate the development and expedite the review of product candidates to treat
serious or life-threatening diseases or conditions and fill unmet medical needs.

Although
Fast Track and priority review do not affect the standards for approval, the FDA will attempt to facilitate early and frequent
meetings with a sponsor of a Fast Track designated product candidate and expedite review of the application for a product candidate
designated for priority review. Accelerated approval provides for an earlier approval for a new product candidate that meets the
following criteria: is intended to treat a serious or life-threatening disease or condition, generally provides a meaningful advantage
over available therapies and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit
or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality (IMM) that is reasonably likely
to predict an effect on IMM or other clinical benefit. A surrogate endpoint is a laboratory measurement or physical sign used
as an indirect or substitute measurement representing a clinically meaningful outcome. As a condition of approval, the FDA may
require that a sponsor of a product candidate receiving accelerated approval perform post-marketing clinical trials to verify
and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the product may be subject
to accelerated withdrawal procedures.

12

A sponsor may seek FDA designation of a product
candidate as a “breakthrough therapy” if the product candidate is intended, alone or in combination with one or more
other therapeutics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that
the product candidate may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints,
such as substantial treatment effects observed early in clinical development. A request for Breakthrough Therapy designation should
be submitted concurrently with, or as an amendment to, an IND, but ideally no later than the end of Phase 2 meeting.

Disclosure
of Clinical Trial Information

Sponsors
of clinical trials of FDA-regulated products are required to register and disclose certain clinical trial information. Information
related to the product, patient population, phase of investigation, trial sites and investigators, and other aspects of the clinical
trial is then made public as part of the registration. Sponsors are also obligated to disclose the results of their clinical trials
within one year of completion, although disclosure of the results of these trials can be delayed in certain circumstances for
up to two additional years. Competitors may use this publicly available information to gain knowledge regarding the progress of
development programs.

Orphan
Drug Designation

In
2009, the FDA granted orphan drug designation for ThermoDox® for the treatment of HCC. In 2005, the FDA granted orphan drug
designation for GEN-1 for the treatment of ovarian cancer. Orphan drug designation does not convey any advantage in, or shorten
the duration of, the regulatory review and approval process. However, if a product which has an orphan drug designation subsequently
receives the first FDA approval for the indication for which it has such designation, the product is entitled to orphan drug exclusivity,
which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven
years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity. Orphan
drug designation can also provide opportunities for grant funding towards clinical trial costs, tax advantages and FDA user-fee
benefits.

Hatch-Waxman
Exclusivity

The
FDCA provides a five-year period of non-patent data exclusivity within the U.S. to the first applicant to gain approval of an
NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing
the same active moiety. During the exclusivity period, the FDA generally may not accept for review an abbreviated new drug application
(ANDA) or a 505(b)(2) NDA submitted by another company that references the previously approved drug. However, an ANDA or 505(b)(2)
NDA referencing the new chemical entity may be submitted after four years if it contains a certification of patent invalidity
or non-infringement.

Biosimilars

The
Biologics Price Competition and Innovation Act of 2009 (BPCIA) created an abbreviated approval pathway for biological product
candidates shown to be highly similar to or interchangeable with an FDA licensed reference product. Biosimilarity sufficient to
reference a prior FDA-approved product requires that there be no differences in conditions of use, route of administration, dosage
form, and strength, and no clinically meaningful differences between the biological product candidate and the reference product
in terms of safety, purity, and potency. Biosimilarity must be shown through analytical trials, animal trials, and a clinical
trial or trials, unless the Secretary of Health and Human Services waives a required element. A biosimilar product candidate may
be deemed interchangeable with a prior approved product if it meets the higher hurdle of demonstrating that it can be expected
to produce the same clinical results as the reference product and, for products administered multiple times, the biological product
and the reference product may be switched after one has been previously administered without increasing safety risks or risks
of diminished efficacy relative to exclusive use of the reference product. To date, a handful of biosimilar products and no interchangeable
products have been approved under the BPCIA. Complexities associated with the larger, and often more complex, structures of biological
products, as well as the process by which such products are manufactured, pose significant hurdles to implementation, which is
still being evaluated by the FDA.

13

A
reference product is granted 12 years of exclusivity from the time of first licensure of the reference product, and no application
for a biosimilar can be submitted for four years from the date of licensure of the reference product. The first biological product
candidate submitted under the abbreviated approval pathway that is determined to be interchangeable with the reference product
has exclusivity against a finding of interchangeability for other biological products for the same condition of use for the lesser
of (i) one year after first commercial marketing of the first interchangeable biosimilar, (ii) 18 months after the first interchangeable
biosimilar is approved if there is no patent challenge, (iii) 18 months after resolution of a lawsuit over the patents of the
reference product in favor of the first interchangeable biosimilar applicant, or (iv) 42 months after the first interchangeable
biosimilar’s application has been approved if a patent lawsuit is ongoing within the 42-month period.

Post-Approval
Requirements

After
FDA approval of a product is obtained, we and our contract manufacturers are required to comply with various post-approval requirements,
including establishment registration and product listing, record-keeping requirements, reporting of adverse reactions and production
problems to the FDA, providing updated safety and efficacy information for drugs, or safety, purity, and potency for biological
products, and complying with requirements concerning advertising and promotional labeling. As a condition of approval of an NDA/BLA,
the FDA may require the applicant to conduct additional clinical trials or other post market testing and surveillance to further
monitor and assess the drug’s safety and efficacy. The FDA can also impose other post-marketing controls on us as well as
our products including, but not limited to, restrictions on sale and use, through the approval process, regulations and otherwise.
The FDA also has the authority to require the recall of our products in the event of material deficiencies or defects in manufacture.
A governmentally mandated recall, or a voluntary recall by us, could result from a number of events or factors, including component
failures, manufacturing errors, instability of product or defects in labeling.

In
addition, manufacturing establishments in the U.S. and abroad are subject to periodic inspections by the FDA and must comply with
cGMP. To maintain compliance with cGMP, manufacturers must expend funds, time and effort
in the areas of production and quality control. The manufacturing process must be capable of consistently producing quality batches
of the product candidate and the manufacturer must develop methods for testing the quality, purity and potency of the product
candidate. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate
that the product candidate does not undergo unacceptable deterioration over its proposed shelf-life.

Foreign
Clinical Studies to Support an IND, NDA, or BLA

The
FDA will accept as support for an IND, NDA, or BLA a well-designed, well-conducted, non-IND foreign clinical trial if it was conducted
in accordance with GCP and the FDA is able to validate the data from the trial through an on-site inspection, if necessary. A
sponsor or applicant who wishes to rely on a non-IND foreign clinical trial to support an IND must submit supporting information
to the FDA to demonstrate that the trial conformed to GCP. This information includes the investigator’s qualifications;
a description of the research facilities; a detailed summary of the protocol and trial results and, if requested, case records
or additional background data; a description of the drug substance and drug product, including the components, formulation, specifications,
and, if available, the bioavailability of the product candidate; information showing that the trial is adequate and well controlled;
the name and address of the independent ethics committee that reviewed the trial and a statement that the independent ethics committee
meets the required definition; a summary of the independent ethics committee’s decision to approve or modify and approve
the trial, or to provide a favorable opinion; a description of how informed consent was obtained; a description of what incentives,
if any, were provided to subjects to participate; a description of how the sponsor monitored the trial and ensured that the trial
was consistent with the protocol; a description of how investigators were trained to comply with GCP and to conduct the trial
in accordance with the trial protocol; and a statement on whether written commitments by investigators to comply with GCP and
the protocol were obtained.

Regulatory
applications based solely on foreign clinical data meeting these criteria may be approved if the foreign data are applicable to
the U.S. population and U.S. medical practice, the trials have been performed by clinical investigators of recognized competence,
and the data may be considered valid without the need for an on-site inspection by FDA or, if FDA considers such an inspection
to be necessary, FDA is able to validate the data through an on-site inspection or other appropriate means. Failure of an application
to meet any of these criteria may result in the application not being approvable based on the foreign data alone.

14

New
Legislation and Regulations

From
time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions
governing the testing, approval, manufacturing and marketing of products regulated by the FDA. In addition to new legislation,
FDA regulations and policies are often revised or interpreted by the agency in ways that may significantly affect our business
and our products. It is impossible to predict whether further legislative changes will be enacted or whether FDA regulations,
guidance, policies or interpretations will be changed or what the effect of such changes, if any, may be. Further, with the
COVID-19 pandemic, it is possible that Congress and FDA may implement new laws, regulations, or policies that may impact our ability
to continue development programs as planned.

Other
regulatory matters

Manufacturing,
sales, promotion and other activities of product candidates following product approval, where applicable, or commercialization
are also subject to regulation by numerous regulatory authorities in the United States in addition to the FDA, which may include
the Centers for Medicare & Medicaid Services, or CMS, other divisions of the Department of Health and Human Services,
or HHS, the Department of Justice, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade
Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local
governments and governmental agencies.

Other
healthcare laws

Healthcare
providers, physicians, and third-party payors will play a primary role in the recommendation and prescription of any products
for which we obtain marketing approval. Our business operations and any current or future arrangements with third-party payors,
healthcare providers and physicians may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations
that may constrain the business or financial arrangements and relationships through which we develop, market, sell and distribute
any drugs for which we obtain marketing approval. In the United States, these laws include, without limitation, state and federal
anti-kickback, false claims, physician transparency, and patient data privacy and security laws and regulations, including but
not limited to those described below.

●

The federal Anti-Kickback
Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying,
receiving or providing any remuneration (including any kickback, bride, or certain rebate), directly or indirectly, overtly
or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase,
order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare
program such as Medicare and Medicaid. A person or entity need not have actual knowledge of the federal Anti-Kickback Statute
or specific intent to violate it in order to have committed a violation. Violations are subject to significant civil and criminal
fines and penalties for each violation, plus up to three times the remuneration involved, imprisonment, and exclusion from
government healthcare programs. In addition, the government may assert that a claim that includes items or services resulting
from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False
Claims Act.

●

The federal civil
and criminal false claims laws, including the civil False Claims Act, or FCA, which prohibit individuals or entities from,
among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval
that are false, fictitious or fraudulent; knowingly making, using, or causing to be made or used, a false statement or record
material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly
concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government. Manufacturers
can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause”
the submission of false or fraudulent claims. The FCA also permits a private individual acting as a “whistleblower”
to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil fines and
penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other
federal healthcare programs.

●

The federal civil
monetary penalties laws, which impose civil fines for, among other things, the offering or transfer or remuneration to a Medicare
or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s
selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care
program, unless an exception applies.

●

The Health Insurance
Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for knowingly and willfully executing
a scheme, or attempting to execute a scheme, to defraud any healthcare benefit program, including private payors, knowingly
and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of
a healthcare offense, or falsifying, concealing or covering up a material fact or making any materially false statements in
connection with the delivery of or payment for healthcare benefits, items or services.

●

HIPAA, as amended
by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing
regulations, imposes, among other things, specified requirements on covered entities and their business associates relating
to the privacy and security of individually identifiable health information including mandatory contractual terms and required
implementation of technical safeguards of such information. HITECH also created new tiers of civil monetary penalties, amended
HIPAA to make civil and criminal penalties directly applicable to business associates in some cases, and gave state attorneys
general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws
and seek attorneys’ fees and costs associated with pursuing federal civil actions.

●

The Physician
Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act, as amended by the Health Care and
Education Reconciliation Act of 2010, or collectively, the ACA, imposed new annual reporting requirements for certain manufacturers
of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s
Health Insurance Program, for certain payments and “transfers of value” provided to physicians (defined to include
doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment
interests held by physicians and their immediate family members. In addition, many states also require reporting of payments
or other transfers of value, many of which differ from each other in significant ways, are often not pre-empted, and may have
a more prohibitive effect than the Sunshine Act, thus further complicating compliance efforts. Effective January 1, 2022,
these reporting obligations will extend to include transfers of value made in the previous year to certain non-physician providers
such as physician assistants and nurse practitioners.

Analogous state
and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing
arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including
private insurers, and may be broader in scope than their federal equivalents; state and foreign laws that require pharmaceutical
companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance
guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state
and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to
physicians and other healthcare providers and restrict marketing practices or require disclosure of marketing expenditures
and pricing information; and state and foreign laws that govern the privacy and security of health information in some circumstances.
These data privacy and security laws may differ from each other in significant ways and often are not pre-empted by HIPAA,
which may complicate compliance efforts.

15

The
scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare
reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently
increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations,
prosecutions, convictions and settlements in the healthcare industry. It is possible that governmental authorities will conclude
that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud
and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any
other related governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative
penalties, damages, fines, imprisonment, disgorgement, exclusion from government funded healthcare programs, such as Medicare
and Medicaid, reputational harm, additional oversight and reporting obligations if we become subject to a corporate integrity
agreement or similar settlement to resolve allegations of non-compliance with these laws and the curtailment or restructuring
of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found
to be not in compliance with applicable laws, they may be subject to similar actions, penalties and sanctions. Ensuring business
arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities,
can be time- and resource-consuming and can divert a company’s attention from its business.

In
the U.S., numerous federal and state laws and regulations, including state data breach notification laws, state health information
privacy laws, and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of health-related
and other personal information. For example, in June 2018, the State of California enacted the California Consumer Privacy Act
of 2018 (the “CCPA”), which came into effect on January 1, 2020 and provides new data privacy rights for consumers
and new operational requirements for companies, which may increase our compliance costs and potential liability. The CCPA gives
California residents expanded rights to access and delete their personal information, opt out of certain personal information
sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties
for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. While
there is currently an exception for protected health information that is subject to HIPAA and clinical trial regulations, as currently
written, the CCPA may impact certain of our business activities. The CCPA could mark the beginning of a trend toward more stringent
state privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.

In
the event we decide to conduct clinical trials or continue to enroll subjects in our ongoing or future clinical trials, we may
be subject to additional privacy restrictions. The collection, use, storage, disclosure, transfer, or other processing of personal
data regarding individuals in the European Economic Area, or EEA, including personal health data, is subject to the EU General
Data Protection Regulation, or GDPR, which became effective on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous
requirements on companies that process personal data, including requirements relating to processing health and other sensitive
data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data
processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification
of data breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the
transfer of personal data to countries outside the EEA, including the United States, and permits data protection authorities to
impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global
revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to
lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations
of the GDPR. In addition, the GDPR includes restrictions on cross-border data transfers. The GDPR may increase our responsibility
and liability in relation to personal data that we process where such processing is subject to the GDPR, and we may be required
to put in place additional mechanisms to ensure compliance with the GDPR, including as implemented by individual countries. Compliance
with the GDPR will be a rigorous and time-intensive process that may increase our cost of doing business or require us to change
our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation,
and reputational harm in connection with our European activities. Further, the United Kingdom’s decision to leave the EU,
often referred to as Brexit, has created uncertainty with regard to data protection regulation in the United Kingdom. In particular,
it is unclear how data transfers to and from the United Kingdom will be regulated now that the United Kingdom has left the EU.

16

Insurance
Coverage and Reimbursement

In
the United States and markets in other countries, patients who are prescribed treatments for their conditions and providers performing
the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Thus,
even if a product candidate is approved, sales of the product will depend, in part, on the extent to which third-party payors,
including government health programs in the United States such as Medicare and Medicaid, commercial health insurers and managed
care organizations, provide coverage, and establish adequate reimbursement levels for, the product. In the United States, the
principal decisions about reimbursement for new medicines are typically made by CMS, an agency within HHS. CMS decides whether
and to what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial
degree. No uniform policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage
and reimbursement for drug products can differ significantly from payor to payor. The process for determining whether a third-party
payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the
payor will pay for the product once coverage is approved. Third-party payors are increasingly challenging the prices charged,
examining the medical necessity, and reviewing the cost-effectiveness of medical products and services and imposing controls to
manage costs. Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which
might not include all of the approved products for a particular indication.

In
order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive
pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the
costs required to obtain FDA or other comparable regulatory approvals. Additionally, companies may also need to provide discounts
to purchasers, private health plans or government healthcare programs. Nonetheless, product candidates may not be considered medically
necessary or cost effective. A decision by a third-party payor not to cover a product could reduce physician utilization once
the product is approved and have a material adverse effect on sales, our operations and financial condition. Additionally, a third-party
payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved.
Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide
coverage and reimbursement for the product, and the level of coverage and reimbursement can differ significantly from payor to
payor.

The
containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of products have
been a focus in this effort. Governments have shown significant interest in implementing cost-containment programs, including
price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls
and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures,
could further limit a company’s revenue generated from the sale of any approved products. Coverage policies and third-party
payor reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more
products for which a company or its collaborators receive regulatory approval, less favorable coverage policies and reimbursement
rates may be implemented in the future.

The
Medicare Prescription Drug, Improvement, and Modernization Act of 2003, also called the Medicare Modernization Act, or the MMA,
established the Medicare Part D program to provide a voluntary prescription drug and biologic benefit to Medicare beneficiaries.
Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities that provide coverage of
outpatient prescription drugs and biologics. Unlike Medicare Parts A and B, Part D coverage is not standardized. Part D prescription
drug plan sponsors are not required to pay for all covered Part D drugs and biologics, and each drug plan can develop its own
formulary that identifies which drugs and biologics it will cover, and at what tier or level. However, Part D prescription drug
formularies must include products within each therapeutic category and class of covered Part D drugs, though not necessarily all
the drugs and biologics in each category or class. Any formulary used by a Part D prescription drug plan must be developed and
reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs and biologics
may increase demand for products for which we obtain marketing approval. Any negotiated prices for any of our products covered
by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Moreover, while the MMA applies
only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations
in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments
from non-governmental payors.

17

For
a drug or biologic product to receive federal reimbursement under the Medicaid or Medicare Part B programs or to be sold directly
to U.S. government agencies, the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing
program. The required 340B discount on a given product is calculated based on the average manufacturer price, or AMP, and Medicaid
rebate amounts reported by the manufacturer. As of 2010, the Patient Protection and Affordable Care Act, as amended by the Health
Care and Education Reconciliation Act of 2010, or collectively the ACA, expanded the types of entities eligible to receive discounted
340B pricing, although under the current state of the law these newly eligible entities (with the exception of children’s
hospitals) will not be eligible to receive discounted 340B pricing on orphan drugs. As 340B drug pricing is determined based on
AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the
required 340B discount to increase. Further, on December 27, 2018, the District Court for the District of Columbia invalidated
a reimbursement formula change instituted by the Centers for Medicare & Medicaid Services, or CMS, under the 340B program.
For the 2019 and 2018 fiscal years, CMS altered the reimbursement formula. The court ruled this change was not an “adjustment”
that was within the Secretary’s discretion to make but was instead a fundamental change in the reimbursement calculation,
and such a dramatic change was beyond the scope of the Secretary’s authority. On May 6, 2019, the district court reiterated
that the rate reduction exceeded the Secretary’s authority and declared that the rate reduction for 2019 also exceeded the
Secretary’s authority and remanded the issue to HHS to devise an appropriate remedy. On July 10, 2019, the district court
entered its final judgment and CMS has filed an appeal and a decision by the Court of Appeals for the D.C. Circuit is pending.
However, subsequently, hospitals have filed a complaint in the U.S. District Court for D.C. to enjoin the reimbursement cuts for
2020. It is unclear how such litigation could affect covered hospitals who might purchase our products in the future and affect
the rates we may charge such facilities for our approved products. Changes to these current laws and state and federal healthcare
reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding
and otherwise affect the prices we may obtain for any product candidates for which we may obtain regulatory approval or the frequency
with which any such product candidate is prescribed or used.

These
laws, and future state and federal healthcare reform measures may be adopted in the future, any of which may result in additional
reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any product candidates for
which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

Outside
the United States, ensuring coverage and adequate payment for a product also involves challenges, as the pricing of biological
products is subject to governmental control in many countries. For example, in the European Union, pricing and reimbursement schemes
vary widely from country to country. Some countries provide that products may be marketed only after a reimbursement price has
been agreed. Some countries may require the completion of additional studies that compare the cost effectiveness of a particular
therapy to currently available therapies or so-called health technology assessments, in order to obtain reimbursement or pricing
approval. Other countries may allow companies to fix their own prices for products but monitor and control product volumes and
issue guidance to physicians to limit prescriptions. Efforts to control prices and utilization of biological products will likely
continue as countries attempt to manage healthcare expenditures.

Current
and future healthcare reform legislation

In
the United States and some foreign jurisdictions, there have been, and likely will continue to be, a number of legislative and
regulatory changes and proposed changes regarding the healthcare system directed at broadening the availability of healthcare,
improving the quality of healthcare, and containing or lowering the cost of healthcare. For example, in March 2010, the United
States Congress enacted the Affordable Care Act, which, among other things, includes changes to the coverage and payment for products
under government health care programs. The Affordable Care Act includes provisions of importance to our potential product candidates
that:

●

created an annual,
nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic products, apportioned
among these entities according to their market share in certain government healthcare programs;

●

expanded eligibility
criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with
income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate
liability;

●

expanded manufacturers’
rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs
and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug
rebates on outpatient prescription drug prices;

●

addressed a new
methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are
inhaled, infused, instilled, implanted or injected;

●

expanded the
types of entities eligible for the 340B drug discount program;

●

established the
Medicare Part D coverage gap discount program by requiring manufacturers to provide point-of-sale-discounts off the negotiated
price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’
outpatient drugs to be covered under Medicare Part D; and

●

created
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness
research, along with funding for such research.

18

Some
of the provisions of the Affordable Care Act have yet to be implemented, and there have been judicial and Congressional challenges
to certain provisions of the Affordable Care Act, as well as recent efforts by the Trump administration to repeal or replace certain
aspects of the Affordable Care Act. Since January 2017, President Trump has signed two Executive Orders and other directives designed
to delay the implementation of certain provisions of the Affordable Care Act. Concurrently, Congress has considered legislation
that would repeal or repeal and replace all or part of the Affordable Care Act. While Congress has not passed comprehensive repeal
legislation, it has enacted laws that modify certain provisions of the Affordable Care Act such as removing penalties, starting
January 1, 2019, for not complying with the Affordable Care Act’s individual mandate to carry health insurance, delaying
the implementation of certain Affordable Care Act-mandated fees, and increasing the point-of-sale discount that is owed by pharmaceutical
manufacturers who participate in Medicare Part D. On December 14, 2018, a Texas U.S. District Court Judge ruled that the ACA is
unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Cuts
and Jobs Act of 2017. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court
ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether
the remaining provisions of the ACA are invalid as well. On March 2, 2020, the United States Supreme Court granted the petitions
for writs of certiorari to review this case, and has allotted one hour for oral arguments, which are expected to occur in the
fall. We will continue to evaluate the effect that the ACA and its possible repeal and replacement has on our business.

Other
legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. In August 2011,
the Budget Control Act of 2011, among other things, included aggregate reductions of Medicare payments to providers of 2% per
fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will remain in
effect through 2029 unless additional Congressional action is taken. In January 2013, the American Taxpayer Relief Act of 2012
was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging
centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments
to providers from three to five years.

Moreover,
payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives. For example, CMS may develop
new payment and delivery models, such as bundled payment models. In addition, recently there has been heightened governmental
scrutiny over the manner in which manufacturers set prices for their commercial products, which has resulted in several Congressional
inquiries and proposed and enacted state and federal legislation designed to, among other things, bring more transparency to product
pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement
methodologies for pharmaceutical products. For example, at the federal level, the Trump administration’s budget for fiscal
year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition,
lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs. Additionally,
the Trump administration previously released a “Blueprint” to lower drug prices and reduce out of pocket costs of
drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain
federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket
costs of drug products paid by consumers. HHS has solicited feedback on some of these measures and has implemented others under
its existing authority. For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using
step therapy, a type of prior authorization, for Part B drugs beginning January 1, 2020. This final rule codified CMS’s
policy change that was effective January 1, 2019. Although a number of these and other measures may require additional authorization
to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or
administrative measures to control drug costs. Any reduction in reimbursement from Medicare and other government programs may
result in a similar reduction in payments from private payers. At the state level, legislatures are increasingly passing legislation
and implementing regulations designed to control biopharmaceutical and biologic product pricing, including price or patient reimbursement
constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in
some cases, designed to encourage importation from other countries and bulk purchasing.

On
May 30, 2018, the Right to Try Act was signed into law. The law, among other things, provides a federal framework for certain
patients to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing
investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical
trials and without obtaining FDA permission under the FDA expanded access program. There is no obligation for a drug manufacturer
to make its drug products available to eligible patients as a result of the Right to Try Act, but the manufacturer must develop
an internal policy and respond to patient requests according to that policy.

19

Regulation
Outside of the U.S.

In
addition to regulations in the U.S., we will be subject to a variety of regulations of other countries governing, among other
things, any clinical trials and commercial sales and distribution of our product candidates. Whether or not we obtain FDA approval
(clinical trial or marketing) for a product, we must obtain the requisite approvals from regulatory authorities in countries outside
of the U.S., such as the EU and China, prior to the commencement of clinical trials or marketing of the products in those countries.
The approval process and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary
greatly from place to place, and the time may be longer or shorter than that required for FDA approval.

In
the EU, before starting a clinical trial, a valid request for authorization must be submitted by the sponsor to the competent
authority of the EU Member State(s) in which the sponsor plans to conduct the clinical trial, as well as to an independent national
Ethics Committee. A clinical trial may commence only once the relevant Ethics Committee(s) has (have) issued a favorable opinion
and the competent authority of the EU Member State(s) concerned has (have) not informed the sponsor of any grounds for non-acceptance.
Failure to comply with the EU requirements may subject a company to the rejection of the request and the prohibition to start
a clinical trial. Clinical trials conducted in the EU (or used for marketing authorization application in the EU) must be conducted
in accordance with applicable Good Clinical Practice (“GCP”) and Good Manufacturing Practice (“GMP”) rules,
ICH guidelines and be consistent with ethical principles. EU Member State inspections are regularly conducted to verify the sponsor’s
compliance with applicable rules. The sponsor is required to record and report to the relevant national competent authorities
(and to the Ethics Committee) information about serious unexpected suspected adverse reactions (“S.U.S.A.Rs”). The
way clinical trials are conducted in the EU will undergo a major change when the new EU Clinical Trial Regulation (Regulation
536/2014) comes into application in 2019.

As
in the U.S., no medicinal product may be placed on the EU market unless a marketing authorization has been issued. In the EU,
medicinal products may be authorized either via the mutual recognition and decentralized procedure, the national procedure or
the centralized procedure. The centralized procedure, which is compulsory for medicines produced by biotechnology or those medicines
intended to treat AIDS, cancer, neurodegenerative disorders or diabetes and is optional for those medicines that are highly innovative,
provides for the grant of a single marketing authorization that is valid for all EU Member States. Marketing authorizations granted
via the centralized procedure are valid for all EU Member States. Products submitted for approval via the centralized procedure
are assessed by the Committee for Medicinal Products for Human Use (CHMP), a committee within the European Medicine Agency (EMA).
The CHMP assesses, inter alia, whether a medicine meets the necessary quality, safety and efficacy requirements and whether it
has a positive risk-benefit balance. The requirements for an application dossier for a biological product contain different aspects
than that of a chemical medicinal product.

In
the EU, the requirements for pricing, coverage and reimbursement of any product candidates for which we obtain regulatory approval
are provided for by the national laws of EU Member States. Governments influence the price of pharmaceutical products through
their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those
products to consumers.

We
may seek orphan designations for our product candidates. In the EU, as we understand it, a medicinal product may be designated
as an orphan medicinal product if the sponsor can establish that it is intended for the diagnosis, prevention or treatment of
a life-threatening or chronically debilitating condition affecting not more than five in 10 thousand persons, or that, for the
same purposes, it is unlikely that the marketing of the medicinal product would generate sufficient return; and that there exists
no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized in the EU or,
if such method exists, that the medicinal product will be of significant benefit to those affected by that condition. Sponsors
who obtain orphan designation benefit from a type of scientific advice specific for designated orphan medicinal products and protocol
assistance from the EMA. Fee reductions are also available depending on the status of the sponsor and the type of service required.
Marketing authorization applications for designated orphan medicinal products must be submitted through the centralized procedure.

20

The
EU Data Protection Directive and Member State implementing legislation may also apply to health-related and other personal information
obtained outside of the U.S. The Directive will be replaced by the EU General Data Protection Regulation in May 2018. The Regulation
will increase our responsibility and liability in relation to personal data that we process, and we may be required to put in
place additional mechanisms to ensure compliance with the new EU data protection rules.

MANUFACTURING
AND SUPPLY

We
do not currently own or operate manufacturing facilities for the production of preclinical, clinical or commercial quantities
of any of our product candidates. We currently contract with third party contract manufacturing organizations (CMOs) for our preclinical
and clinical trial supplies, and we expect to continue to do so to meet the preclinical and any clinical requirements of our product
candidates. We have agreements for the supply of such drug materials with manufacturers or suppliers that we believe have sufficient
capacity to meet our demands. In addition, we believe that adequate alternative sources for such supplies exist. However, there
is a risk that, if supplies are interrupted, it would materially harm our business. We typically order raw materials and services
on a purchase order basis and do not enter into long-term dedicated capacity or minimum supply arrangements.

Manufacturing
is subject to extensive regulations that impose various procedural and documentation requirements, which govern record keeping,
manufacturing processes and controls, personnel, quality control and quality assurance, among others. Our CMOs manufacture our
product candidates under cGMP conditions. cGMP is a regulatory standard for the production of pharmaceuticals that will be used
in humans which is recognized by FDA and many foreign regulatory authorities.

SALES
AND MARKETING

Our
current focus is on the development of our existing portfolio, the completion of clinical trials and, if and where appropriate,
the registration of our product candidates. We currently do not have marketing, sales and distribution capabilities. If we receive
marketing and commercialization approval for any of our product candidates, we intend to market the product either directly or
through strategic alliances and distribution agreements with third parties. The ultimate implementation of our strategy for realizing
the financial value of our product candidates is dependent on the results of clinical trials for our product candidates, the availability
of regulatory approvals and the ability to negotiate acceptable commercial terms with third parties.

PRODUCT
LIABILITY AND INSURANCE

Our
business exposes us to potential product liability risks that are inherent in the testing, manufacturing and marketing of human
therapeutic products. We presently have product liability insurance limited to $10 million per incident, and if we were to be
subject to a claim in excess of this coverage or to a claim not covered by our insurance and the claim succeeded, we would be
required to pay the claim out of our own limited resources.

COMPETITION

Competition
in the discovery and development of new methods for treating and preventing disease is intense. We face, and will continue to
face, competition from pharmaceutical and biotechnology companies, as well as academic and research institutions and government
agencies both in the U.S. and abroad. We face significant competition from organizations pursuing the same or similar technologies
used by us in our drug discovery efforts and from organizations developing pharmaceuticals that are competitive with our product
candidates.

Most
of our competitors, either alone or together with their collaborative partners, have substantially greater financial resources
and larger research and development staffs than we do. In addition, most of these organizations, either alone or together with
their collaborators, have significantly greater experience than we do in developing products, undertaking preclinical testing
and clinical trials, obtaining FDA and other regulatory approvals of products, and manufacturing and marketing products. Mergers
and acquisitions in the pharmaceutical industry may result in even more resources being concentrated among our competitors. These
companies, as well as academic institutions, governmental agencies, and private research organizations, also compete with us in
recruiting and retaining highly qualified scientific personnel and consultants. Our ability to compete successfully with other
companies in the pharmaceutical and biotechnology field also depends on the status of our collaborations and on the continuing
availability of capital to us.

21

ThermoDox®

Although
there are many drugs and devices marketed and under development for the treatment of cancer, the Company is not aware of any other
heat activated drug delivery product either being marketed or in human clinical development. In addition, the Company is not aware
of any other Phase III clinical trial for the treatment of newly diagnosed or intermediate stage HCC or primary liver cancer.

GEN-1

Studied
indications for GEN-1 include ovarian cancer and glioblastoma multiforme (GBM) brain cancer. In evaluating the competitive landscape
for both indications, early stage indications are treated with chemotherapy (temozolomide, BCNU, CCNU for brain cancer; docetaxel,
doxil and cisplatinum for ovarian cancer), while later stage ovarian cancer is treated with Bevacizumab - Avastin®, an anti-angiogenesis
inhibitor. Avastin® is currently also being evaluated for early stage disease.

In
product positioning for the ovarian cancer indications, there currently is no direct immunotherapy competitor for GEN-1, which
will be studied as an adjuvant to both chemotherapy standard of care regimens, as well as anti-angiogenesis compounds. To support
these cases, we have conducted clinical studies in combination with chemotherapy for ovarian cancer, and preclinical studies in
combination with both temozolomide and Bevacizumab-Avastin®.

INTELLECTUAL
PROPERTY

Licenses

Duke
University License Agreement

In
1999, we entered into a license agreement with Duke University under which we received exclusive rights, subject to certain exceptions,
to commercialize and use Duke’s thermo-liposome technology. In relation to these liposome patents licensed from Duke University,
we have filed two additional patents related to the formulation and use of liposomes. We have also licensed from Valentis, CA
certain global rights covering the use of pegylation for temperature sensitive liposomes.

In
2003, our obligations under the license agreement with Duke University with respect to the testing and regulatory milestones and
other licensed technology performance deadlines were eliminated in exchange for a payment of shares of our common stock. The license
agreement continues to be subject to agreements to pay a royalty based upon future sales. In conjunction with the patent holder,
we have filed international applications for a certain number of the U.S. patents.

Our
rights under the license agreement with Duke University extend for the longer of 20 years or the end of any term for which any
relevant patents are issued by the United States Patent and Trademark Office. Currently we have rights to Duke’s patent
for its thermo-liposome technology in the U.S. and to future patents received by Duke in Canada, the EU, Japan and Australia,
where it has patent applications have been granted. The European grant provides coverage in the European Community. For this technology,
our license rights are worldwide, including the U.S., Canada, certain EU Member States, Australia, Hong Kong, and Japan.

Patents
and Proprietary Rights

Celsion
holds an exclusive license agreement with Duke University for its temperature-sensitive liposome technology that covers the ThermoDox®
formulation. Celsion also has issued patents which pertain specifically to methods of storing stabilized, temperature-sensitive
liposomal formulations and will assist in the protection of global rights. These patents will extend the overall term of the ThermoDox®
patent portfolio to 2026. These patents are the first in this family, which includes pending applications in the U.S., Europe
and additional key commercial geographies in Asia. This extended patent runway to 2026 allows for the evaluation of future development
activities for ThermoDox® and Celsion’s heat-sensitive liposome technology platform.

For
the ThermoDox® technology, we either exclusively license or own U.S. and international patents with claims and methods and
compositions of matters that cover various aspects of lysolipid thermally sensitive liposomes technology, with expiration dates
ranging from 2018 to 2026.

For
the TheraPlas technology, we own three U.S. and international patents and related applications with claims and methods and compositions
of matters that cover various aspects of TheraPlas and GEN-1 technologies, with expiration dates ranging from 2020 to 2028.

22

There
can be no assurance that an issued patent will remain valid and enforceable in a court of law through the entire patent term.
Should the validity of a patent be challenged, the legal process associated with defending the patent can be costly and time consuming.
Issued patents can be subject to oppositions, interferences and other third-party challenges that can result in the revocation
of the patent or maintenance of the patent in amended form (and potentially in a form that renders the patent without commercially
relevant or broad coverage). Competitors may be able to circumvent our patents. Development and commercialization of pharmaceutical
products can be subject to substantial delays and it is possible that at the time of commercialization any patent covering the
product has expired or will be in force for only a short period of time following commercialization. We cannot predict with any
certainty if any third-party U.S. or foreign patent rights, other proprietary rights, will be deemed infringed by the use of our
technology. Nor can we predict with certainty which, if any, of these rights will or may be asserted against us by third parties.
Should we need to defend ourselves and our partners against any such claims, substantial costs may be incurred. Furthermore, parties
making such claims may be able to obtain injunctive or other equitable relief, which could effectively block our ability to develop
or commercialize some or all of our products in the U.S. and abroad and could result in the award of substantial damages. In the
event of a claim of infringement, we or our partners may be required to obtain one or more licenses from a third party. There
can be no assurance that we can obtain a license on a reasonable basis should we deem it necessary to obtain rights to an alternative
technology that meets our needs. The failure to obtain a license may have a material adverse effect on our business, results of
operations and financial condition.

In
addition to the rights available to us under completed or pending license agreements, we rely on our proprietary know-how and
experience in the development and use of heat for medical therapies, which we seek to protect, in part, through proprietary information
agreements with employees, consultants and others. There can be no assurance that these proprietary information agreements will
not be breached, that we will have adequate remedies for any breach, or that these agreements, even if fully enforced, will be
adequate to prevent third-party use of the Company’s proprietary technology. Please refer to “Item 1A, Risk Factors,”
including, but not limited to, “We rely on trade secret protection and other unpatented proprietary rights for important
proprietary technologies, and any loss of such rights could harm our business, results of operations and financial condition.”
Similarly, we cannot guarantee that technology rights licensed to us by others will not be successfully challenged or circumvented
by third parties, or that the rights granted will provide us with adequate protection. Please refer to “Item 1A, Risk
Factors,” including, but not limited to, “Our business depends on licensing agreements with third parties to permit
us to use patented technologies. The loss of any of our rights under these agreements could impair our ability to develop and
market our products.”

EMPLOYEES

As
of March 25, 2020, we employed 29 full-time employees. We also maintain active independent contractor relationships with various
individuals, most of whom have month-to-month or annual consulting agreements. None of our employees are covered by a collective
bargaining agreement, and we consider our relationship with our employees to be good.

COMPANY
INFORMATION

Celsion
was founded in 1982 and is a Delaware corporation. Our principal executive offices are located at 997 Lenox Drive, Suite 100,
Lawrenceville, NJ 08648. Our telephone number is (609) 896-9100. The Company’s website is www.celsion.com. The information
contained in, or that can be accessed through, our website is not part of, and is not incorporated in, this Annual Report.

AVAILABLE
INFORMATION

We
make available free of charge through our website, www.celsion.com, our Annual Report, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically
filed with or furnished to the Securities and Exchange Commission (the SEC). In addition, our website includes other items related
to corporate governance matters, including, among other things, our corporate governance principles, charters of various committees
of the Board of Directors, and our code of business conduct and ethics applicable to all employees, officers and directors. We
intend to disclose on our internet website any amendments to or waivers from our code of business conduct and ethics as well as
any amendments to its corporate governance principles or the charters of various committees of the Board of Directors. Copies
of these documents may be obtained, free of charge, from our website. The SEC also maintains an internet site that contains reports,
proxy and information statements and other information regarding issuers that file periodic and other reports electronically with
the Securities and Exchange Commission. The address of that site is www.sec.gov. The information available on or through our website
is not a part of this Annual Report and should not be relied upon.

23

RECENT
EVENTS

On
February 27, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with several
institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Offering”),
an aggregate of 4,571,428 shares (the “Shares”) of our common stock at an offering price of $1.05 per share for gross
proceeds of approximately $4.8 million before the deduction of the Placement Agent fees and offering expenses. The Shares are
being offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-227236). The Purchase Agreement contains
customary representations, warranties and agreements by the Company and customary conditions to closing. The closing of the Offering
and the Private Placement occurred on March 3, 2020. In a concurrent private placement (the “Private Placement”),
the Company agreed to issue to the investors that participated in the Offering, for no additional consideration, warrants, to
purchase up to 2,971,428 shares of Common Stock (the “Original Warrants”). The Original Warrants were initially exercisable
six months following their and were set to expire on the five-year anniversary of such initial exercise date. The Warrants had
an exercise price of $1.15 per share subject to adjustment as provided therein. On March 12, 2020 the Company entered into private
exchange agreements (the “Exchange Agreements”) with holders the Warrants. Pursuant to the Exchange Agreements, in
return for a higher exercise price of $1.24 per share of Common Stock, the Company issued new warrants to the Investors to purchase
up to 3,200,000 shares of Common Stock (the “Exchange Warrants”) in exchange for the Original Warrants. The Exchange
Warrants, like the Original Warrants, are initially exercisable six months following their issuance (the “Initial Exercise
Date”) and expire on the five-year anniversary of their Initial Exercise Date. Other than having a higher exercise price,
different issue date, Initial Exercise Date and expiration date, the terms of the Exchange Warrants are identical to those of
the Original Warrants.

On
March 5, 2020, the Company delivered notice to Aspire Capital Fund, LLC, an Illinois limited liability company (“Aspire
Capital”), terminating the Common Stock Purchase Agreement dated October 28, 2019 (the “2019 Aspire Purchase Agreement”)
with Aspire Capital effective as of March 6, 2020. The 2019 Aspire Purchase Agreement provided that, upon the terms and subject
to the conditions and limitations set forth therein, Aspire Capital was committed to purchase up to an aggregate of $10 million
of shares of the Company’s common stock over the 24-month term of the 2019 Aspire Purchase Agreement at a price equal to
(i) the lowest sale price of the Company’s common stock on the purchase date; or (ii) the arithmetic average of the three
(3) lowest closing sale prices for the Company’s common stock during the ten (10) consecutive trading days ending on the
trading day immediately preceding the purchase date. In consideration for entering into the 2019 Aspire Purchase Agreement, the
Company issued to Aspire Capital 100,000 shares of the Company’s common stock.

ITEM
1A.

RISK
FACTORS

We
are providing the following cautionary discussion of risk factors, uncertainties and assumptions that we believe are relevant
to our business. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially
from expected or historical results and our forward-looking statements. We note these factors for investors as permitted by Section
21E of the Securities Exchange Act, and Section 27A of the Securities Act. You should understand that it is not possible to predict
or identify all such factors. Consequently, you should not consider the following to be a complete discussion of all potential
risks or uncertainties that may impact our business. Moreover, we operate in a competitive and rapidly changing environment. New
factors emerge from time to time and it is not possible to predict the impact of all of these factors on our business, financial
condition or results of operations. We undertake no obligation to publicly update forward-looking statements, whether as a result
of new information, future events, or otherwise.

RISKS
RELATED TO OUR BUSINESS

We
have a history of significant losses from operations and expect to continue to incur significant losses for the foreseeable future.

Since
our inception, our expenses have substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit
of $291 million at December 31, 2019. For the years ended December 31, 2019 and 2018, we incurred net losses of $16.9 million,
and $11.9 million, respectively. We currently have no product revenue and do not expect to generate any product revenue for the
foreseeable future. Because we are committed to continuing our product research, development, clinical trial and commercialization
programs, we will continue to incur significant operating losses unless and until we complete the development of ThermoDox®,
GEN-1 and other new product candidates and these product candidates have been clinically tested, approved by the United States
Food and Drug Administration (FDA) and successfully marketed. The amount of future losses is uncertain. Our ability to achieve
profitability, if ever, will depend on, among other things, us or our collaborators successfully developing product candidates,
obtaining regulatory approvals to market and commercialize product candidates, manufacturing any approved products on commercially
reasonable terms, establishing a sales and marketing organization or suitable third-party alternatives for any approved product
and raising sufficient funds to finance business activities. If we or our collaborators are unable to develop and commercialize
one or more of our product candidates or if sales revenue from any product candidate that receives approval is insufficient, we
will not achieve profitability, which could have a material adverse effect on our business, financial condition, results of operations
and prospects.

24

We
do not expect to generate revenue for the foreseeable future.

We
have devoted our resources to developing a new generation of products and will not be able to market these products until we have
completed clinical trials and obtain all necessary governmental approvals. Our lead product candidate, ThermoDox® and the
product candidates we purchased in our acquisition of EGEN, including GEN-1, are still in various stages of development and trials
and cannot be marketed until we have completed clinical testing and obtained necessary governmental approval. Following our announcement
on January 31, 2013 that the HEAT Study failed to meet its primary endpoint of progression free survival, we continued to follow
the patients enrolled in the HEAT Study to the secondary endpoint, overall survival. Based on the overall survival data from the
post-hoc analysis of results from the HEAT Study, we launched a pivotal, double-blind, placebo-controlled Phase III trial of ThermoDox®
in combination with RFA in primary liver cancer, known as the OPTIMA Study, in the first half of 2014. GEN-1 is currently in an
early stage of clinical development for the treatment of ovarian cancer. We conducted a Phase I dose-escalation clinical trial
of GEN-1 in combination with the standard of care in neo-adjuvant ovarian cancer starting in the second half of 2015 and completing
enrollment in 2017. We also expanded our ovarian cancer development program to include a Phase I/II dose escalating trial evaluating
GEN-1 in ovarian cancer patients. Our delivery technology platforms, TheraPlas and TheraSilence, are in preclinical stages of
development. Accordingly, our revenue sources are, and will remain, extremely limited until our product candidates are clinically
tested, approved by the FDA or foreign regulatory agencies and successfully marketed. We cannot guarantee that any of our product
candidates will be approved by the FDA or any foreign regulatory agency or marketed, successfully or otherwise, at any time in
the foreseeable future or at all.

Drug
development is an inherently uncertain process with a high risk of failure at every stage of development. Our lead drug candidate
failed to meet its primary endpoint in our earlier Phase III clinical trial.

On January 31, 2013, we announced that our lead product ThermoDox®
in combination with radiofrequency ablation (RFA) failed to meet the primary endpoint of the Phase III clinical trial for primary
liver cancer, known as the HEAT study. We have not completed our final analysis of the data and do not know the extent to which,
if any, the failure of ThermoDox® to meet its primary endpoint in the Phase III trial could impact our other ongoing studies
of ThermoDox® including a pivotal, double-blind, placebo-controlled Phase III trial of ThermoDox® in combination with RFA
in primary liver cancer, known as the OPTIMA study, which we launched in the first half of 2014. The trial design of the OPTIMA
study is based on the overall survival data from the post-hoc analysis of results from the HEAT study. In addition, we have initiated
a Phase I dose-escalation clinical trial of GEN-1 in combination with the standard of care in neo-adjuvant ovarian cancer, known
as the OVATION Study, and plan to expand our ovarian cancer development program to include a Phase I/II dose escalating trial evaluating
GEN-1, known as the OVATION II Study, in ovarian cancer patients.

Preclinical
testing and clinical trials are long, expensive and highly uncertain processes and failure can unexpectedly occur at any stage
of clinical development, as evidenced by the failure of ThermoDox® to meet its primary endpoint in the HEAT study. Drug development
is inherently risky and clinical trials take us several years to complete. The start or end of a clinical trial is often delayed
or halted due to changing regulatory requirements, manufacturing challenges, required clinical trial administrative actions, slower
than anticipated patient enrollment, changing standards of care, availability or prevalence of use of a comparator drug or required
prior therapy, clinical outcomes including insufficient efficacy, safety concerns, or our own financial constraints. The results
from preclinical testing or early clinical trials of a product candidate may not predict the results that will be obtained in
later phase clinical trials of the product candidate. We, the FDA or other applicable regulatory authorities may suspend clinical
trials of a product candidate at any time for various reasons, including a belief that subjects participating in such trials are
being exposed to unacceptable health risks or adverse side effects. We may not have the financial resources to continue development
of, or to enter into collaborations for, a product candidate if we experience any problems or other unforeseen events that delay
or prevent regulatory approval of, or our ability to commercialize, product candidates. The failure of one or more of our drug
candidates or development programs could have a material adverse effect on our business, financial condition and results of operations.

25

We
will need to raise additional capital to fund our planned future operations, and we may be unable to secure such capital without
dilutive financing transactions. If we are not able to raise additional capital, we may not be able to complete the development,
testing and commercialization of our product candidates.

We
have not generated significant revenue and have incurred significant net losses in each year since our inception. For the year
ended December 31, 2019, we had a net loss of $16.9 million and used $20.3 million to fund operations. We have incurred approximately
$291 million of accumulated net losses as of December 31, 2019. As of December 31, 2019, we had approximately $16.7 million in
cash, short-term investments, interest receivable and deferred income tax asset.

We
have substantial future capital requirements to continue our research and development activities and advance our product candidates
through various development stages. For example, ThermoDox® is being evaluated in a Phase III clinical trial in combination
with RFA for the treatment of primary liver cancer and other preclinical studies. We completed a Phase I dose-escalation clinical
trial of GEN-1 in combination with the standard of care in neo-adjuvant ovarian cancer in the third quarter of 2017 and expanded
our clinical development program for GEN-1 into a follow-on Phase I/II trial for newly diagnosed ovarian cancer in 2018.

To
complete the development and commercialization of our product candidates, we will need to raise substantial amounts of additional
capital to fund our operations. Our future capital requirements will depend upon numerous unpredictable factors, including, without
limitation, the cost, timing, progress and outcomes of clinical studies and regulatory reviews of our proprietary drug candidates,
our efforts to implement new collaborations, licenses and strategic transactions, general and administrative expenses, capital
expenditures and other unforeseen uses of cash. Other than the Capital on Demand Agreement that provides us the ability to sell
equity securities in the future, we do not have any committed sources of financing and cannot assure you that alternate funding
will be available in a timely manner, on acceptable terms or at all. We may need to pursue dilutive equity financings, such as
the issuance of shares of common stock, convertible debt or other convertible or exercisable securities. Such dilutive equity
financings could dilute the percentage ownership of our current common stockholders and could significantly lower the market value
of our common stock. In addition, a financing could result in the issuance of new securities that may have rights, preferences
or privileges senior to those of our existing stockholders.

If
we are unable to obtain additional capital on a timely basis or on acceptable terms, or, if current market conditions, including
the volatility in the markets resulting from the worldwide Covid-19 pandemic, make capital raising impractical or impossible,
we may be required to delay, reduce or terminate our research and development programs and preclinical studies or clinical
trials, if any, limit strategic opportunities or undergo corporate restructuring activities. We also could be required to seek
funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies,
product candidates or potential markets or that could impose onerous financial or other terms. Furthermore, if we cannot fund
our ongoing development and other operating requirements, particularly those associated with our obligations to conduct clinical
trials under our licensing agreements, we will be in breach of these licensing agreements and could therefore lose our license
rights, which could have material adverse effects on our business.

If
we do not obtain or maintain FDA and foreign regulatory approvals for our drug candidates on a timely basis, or at all, or if
the terms of any approval impose significant restrictions or limitations on use, we will be unable to sell those products and
our business, results of operations and financial condition will be negatively affected.

To
obtain regulatory approvals from the FDA and foreign regulatory agencies, we must conduct clinical trials demonstrating that our
products are safe and effective. We may need to amend ongoing trials, or the FDA and/or foreign regulatory agencies may require
us to perform additional trials beyond those we planned. The testing and approval process require substantial time, effort and
resources, and generally takes a number of years to complete. The time to complete testing and obtaining approvals is uncertain,
and the FDA and foreign regulatory agencies have substantial discretion, at any phase of development, to terminate clinical studies,
require additional clinical studies or other testing, delay or withhold approval, and mandate product withdrawals, including recalls.
In addition, our drug candidates may have undesirable side effects or other unexpected characteristics that could cause us or
regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restricted label or the delay or
denial of regulatory approval by regulatory authorities.

Even
if we receive regulatory approval of a product, the approval may limit the indicated uses for which the drug may be marketed.
The failure to obtain timely regulatory approval of product candidates, the imposition of marketing limitations, or a product
withdrawal would negatively impact our business, results of operations and financial condition. Even if we receive approval, we
will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional
expense and subject us to restrictions, withdrawal from the market, or penalties if we fail to comply with applicable regulatory
requirements or if we experience unanticipated problems with our product candidates, when and if approved. Finally, even if we
obtain FDA approval of any of our product candidates, we may never obtain approval or commercialize such products outside of the
United States, given that we may be subject to additional or different regulatory burdens in other markets. This could limit our
ability to realize their full market potential.

26

Our
industry is highly regulated by the FDA and comparable foreign regulatory agencies. We must comply with extensive, strictly enforced
regulatory requirements to develop, obtain, and maintain marketing approval for any of our product candidates.

Securing
FDA or comparable foreign regulatory approval requires the submission of extensive preclinical and clinical data and supporting
information for each therapeutic indication to establish the product candidate’s safety and efficacy for its intended use.
It takes years to complete the testing of a new drug or biological product and development delays and/or failure can occur at
any stage of testing. Any of our present and future clinical trials may be delayed, halted, not authorized, or approval of any
of our products may be delayed or may not be obtained due to any of the following:

●

any
preclinical test or clinical trial may fail to produce safety and efficacy results satisfactory to the FDA or comparable foreign
regulatory authorities;

●

preclinical
and clinical data can be interpreted in different ways, which could delay, limit or prevent marketing approval;

●

negative
or inconclusive results from a preclinical test or clinical trial or adverse events during a clinical trial could cause a
preclinical study or clinical trial to be repeated or a development program to be terminated, even if other studies relating
to the development program are ongoing or have been completed and were successful;

●

the
FDA or comparable foreign regulatory authorities can place a clinical hold on a trial if, among other reasons, it finds that
subjects enrolled in the trial are or would be exposed to an unreasonable and significant risk of illness or injury;

●

the
FDA or comparable foreign regulatory authorities may suffer delays related to the impact of the spread of COVID-19 on the
FDA’s ability to continue its normal operations

●

the
facilities that we utilize, or the processes or facilities of third-party vendors, including without limitation the contract
manufacturers who will be manufacturing drug substance and drug product for us or any potential collaborators, may not satisfactorily
complete inspections by the FDA or comparable foreign regulatory authorities; and

●

we
may encounter delays or rejections based on changes in FDA policies or the policies of comparable foreign regulatory authorities
during the period in which we develop a product candidate, or the period required for review of any final marketing approval
before we are able to market any product candidate.

In
addition, information generated during the clinical trial process is susceptible to varying interpretations that could delay,
limit, or prevent marketing approval at any stage of the approval process. Moreover, early positive preclinical or clinical trial
results may not be replicated in later clinical trials. As more product candidates within a particular class of drugs proceed
through clinical development to regulatory review and approval, the amount and type of clinical data that may be required by regulatory
authorities may increase or change. Failure to demonstrate adequately the quality, safety, and efficacy of any of our product
candidates would delay or prevent marketing approval of the applicable product candidate. We cannot assure you that if clinical
trials are completed, either we or our potential collaborators will submit applications for required authorizations to manufacture
or market potential products or that any such application will be reviewed and approved by appropriate regulatory authorities
in a timely manner, if at all.

27

New
gene-based products for therapeutic applications are subject to extensive regulation by the FDA and comparable agencies in other
countries. The precise regulatory requirements with which we will have to comply, now and in the future, are uncertain due to
the novelty of the gene-based products we are developing.

The
regulatory approval process for novel product candidates such as ours can be significantly more expensive and take longer than
for other, better known or more extensively studied product candidates. Limited data exist regarding the safety and efficacy of
DNA-based therapeutics compared with conventional therapeutics, and government regulation of DNA-based therapeutics is evolving.
Regulatory requirements governing gene and cell therapy products have changed frequently and may continue to change in the future.
The FDA has established the Office of Cellular, Tissue and Gene Therapies within its Center for Biologics Evaluation and Research
(CBER), to consolidate the review of gene therapy and related products, and has established the Cellular, Tissue and Gene Therapies
Advisory Committee to advise CBER in its review. It is difficult to determine how long it will take or how much it will cost to
obtain regulatory approvals for our product candidates in either the U.S. or the European Union or how long it will take to commercialize
our product candidates.

Adverse
events or the perception of adverse events in the field of gene therapy generally, or with respect to our product candidates specifically,
may have a particularly negative impact on public perception of gene therapy and result in greater governmental regulation, including
future bans or stricter standards imposed on gene-based therapy clinical trials, stricter labeling requirements and other regulatory
delays in the testing or approval of our potential products. For example, each clinical trial of investigational gene therapies
must be reviewed and approved by the Institutional Biosafety Committee (IBC) for each clinical site. IBCs were established under
the National Institutes of Health (NIH) Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules to provide
local review and oversight of nearly all forms of research utilizing recombinant or synthetic nucleic acid molecules. The IBC
assesses biosafety issues, specifically, safety practices and containment procedures, related to the investigational product and
clinical study. Compliance with the NIH Guidelines is mandatory for investigators at institutions receiving NIH funds for research
involving recombinant DNA, however many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily
follow them. Such trials remain subject to FDA and other clinical trial regulations, and only after FDA, IBC, and other relevant
approvals are in place can these protocols proceed. The FDA can put an investigational new drug (IND) application on a clinical
hold even if the IBC has provided a favorable review. Such committee and advisory group reviews and any new guidelines they
promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs,
lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates
or lead to significant post-approval limitations or restrictions. Any increased scrutiny could delay or increase the costs of
our product development efforts or clinical trials.

Even
if our products receive regulatory approval, they may still face future development and regulatory difficulties. Government regulators
may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially
costly post-approval studies. This governmental oversight may be particularly strict with respect to gene-based therapies.

Serious
adverse events, undesirable side effects or other unexpected properties of our product candidates may be identified during development
or after approval, which could lead to the discontinuation of our clinical development programs, refusal by regulatory authorities
to approve our product candidates or, if discovered following marketing approval, revocation of marketing authorizations or limitations
on the use of our product candidates thereby limiting the commercial potential of such product candidate.

As
we continue our development of our product candidates and initiate clinical trials of our additional product candidates, serious
adverse events, undesirable side effects or unexpected characteristics may emerge causing us to abandon these product candidates
or limit their development to more narrow uses or subpopulations in which the serious adverse events, undesirable side effects
or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.

Even
if our product candidates initially show promise in these early clinical trials, the side effects of drugs are frequently only
detectable after they are tested in large, Phase 3 clinical trials or, in some cases, after they are made available to patients
on a commercial scale after approval. Sometimes, it can be difficult to determine if the serious adverse or unexpected side effects
were caused by the product candidate or another factor, especially in oncology subjects who may suffer from other medical conditions
and be taking other medications. If serious adverse or unexpected side effects are identified during development and are determined
to be attributed to our product candidate, we may be required to develop a Risk Evaluation and Mitigation Strategy (REMS) to mitigate
those serious safety risks, which could impose significant distribution and use restrictions on our products.

In
addition, drug-related side effects could also affect subject recruitment or the ability of enrolled subjects to complete the
trial, result in potential product liability claims, reputational harm, withdrawal of approvals, a requirement to include additional
warnings on the label or to create a medication guide outlining the risks of such side effects for distribution to patients. It
can also result in patient harm, liability lawsuits, and reputational harm. Any of these occurrences could prevent us from achieving
or maintaining market acceptance and may harm our business, financial condition and prospects significantly.

28

If
we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise
adversely affected.

We
may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical
trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients
who remain in the trial until its conclusion. The enrollment of patients depends on many factors, including:

●

the
patient eligibility and exclusion criteria defined in the protocol;

●

the
size of the patient population required for analysis of the trial’s primary endpoints and the process for identifying
patients;

●

the
willingness or availability of patients to participate in our trials (including due to the recent outbreak of the coronavirus
strain known as COVID-19, or the COVID-19 coronavirus);

●

the
proximity of patients to trial sites;

●

the
design of the trial;

●

our
ability to recruit clinical trial investigators with the appropriate competencies and experience;

●

clinicians’
and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation
to other available therapies, including any new products that may be approved for the indications we are investigating;

●

the
availability of competing commercially available therapies and other competing drug candidates’ clinical trials;

●

our
ability to obtain and maintain patient informed consents; and

●

the
risk that patients enrolled in clinical trials will drop out of the trials before completion.

In
addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic
areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some
patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.
Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same
clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical
trials in such clinical trial site. Certain of our planned clinical trials may also involve invasive procedures, which may lead
some patients to drop out of trials to avoid these follow-up procedures.

Further,
timely enrollment in clinical trials is reliant on clinical trial sites which may be adversely affected by global health matters,
including, among other things, pandemics. For example, our clinical trial sites may be located in regions currently being affected
by the COVID-19 coronavirus. Some factors from the COVID-19 coronavirus outbreak that we believe may adversely affect enrollment
in our trials include:

●

the diversion of healthcare resources away from the conduct of clinical trial matters to focus on pandemic concerns, including
the attention of infectious disease physicians serving as our clinical trial investigators, hospitals serving as our clinical
trial sites and hospital staff supporting the conduct of our clinical trials;

●

patients who would otherwise
be candidates for enrollment in our clinical trials, may become infected with the COVID-19 coronavirus, which may kill some patients
and render others too ill to participate, limiting the available pool of participants for our trials;

●

limitations on travel that
interrupt key trial activities, such as clinical trial site initiations and monitoring;

●

interruption in global shipping
affecting the transport of clinical trial materials, such as investigational drug product and comparator drugs used in our trials;
and

●

employee furlough days that
delay necessary interactions with local regulators, ethics committees and other important agencies and contractors.

29

These
and other factors arising from the COVID-19 coronavirus could worsen in countries that are already afflicted with the virus or
could continue to spread to additional countries, each of which may further adversely impact our clinical trials. The global outbreak
of the COVID-19 coronavirus continues to evolve and the conduct of our trials may continue to be adversely affected, despite efforts
to mitigate this impact.

In
the future, we may consider strategic alternatives intended to further the development of our business, which may include acquiring
businesses, technologies or products, out- or in-licensing product candidates or technologies or entering into a business combination
with another company. Any strategic transaction may require us to incur non-recurring or other charges, increase our near- and
long-term expenditures and pose significant integration or implementation challenges or disrupt our management or business. These
transactions would entail numerous operational and financial risks, including exposure to unknown liabilities, disruption of our
business and diversion of our management’s time and attention in order to manage a collaboration or develop acquired products,
product candidates or technologies, incurrence of substantial debt or dilutive issuances of equity securities to pay transaction
consideration or costs, higher than expected collaboration, acquisition or integration costs, write-downs of assets or goodwill
or impairment charges, increased amortization expenses, difficulty and cost in facilitating the collaboration or combining the
operations and personnel of any acquired business, impairment of relationships with key suppliers, manufacturers or customers
of any acquired business due to changes in management and ownership and the inability to retain key employees of any acquired
business. Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of
the nature described above, any transactions that we do complete may be subject to the foregoing or other risks and have a material
adverse effect on our business, results of operations, financial condition and prospects. Conversely, any failure to enter any
strategic transaction that would be beneficial to us could delay the development and potential commercialization of our product
candidates and have a negative impact on the competitiveness of any product candidate that reaches market.

Strategic
transactions, such as acquisitions, partnerships and collaborations, including the EGEN acquisition, involve numerous risks, including:

●

the
failure of markets for the products of acquired businesses, technologies or product lines to develop as expected;

●

uncertainties
in identifying and pursuing acquisition targets;

●

the
challenges in achieving strategic objectives, cost savings and other benefits expected from acquisitions;

●

the
risk that the financial returns on acquisitions will not support the expenditures incurred to acquire such businesses or the
capital expenditures needed to develop such businesses;

●

difficulties
in assimilating the acquired businesses, technologies or product lines;

●

the
failure to successfully manage additional business locations, including the additional infrastructure and resources necessary
to support and integrate such locations;

●

the
existence of unknown product defects related to acquired businesses, technologies or product lines that may not be identified
due to the inherent limitations involved in the due diligence process of an acquisition;

●

the
diversion of management’s attention from other business concerns;

●

risks
associated with entering markets or conducting operations with which we have no or limited direct prior experience;

risks
related to the effect that internal control processes of acquired businesses might have on our financial reporting and management’s
report on our internal control over financial reporting;

30

●

the
potential loss of key employees related to acquired businesses, technologies or product lines; and

●

the
incurrence of significant exit charges if products or technologies acquired in business combinations are unsuccessful.

We
may never realize the perceived benefits of the EGEN acquisition or potential future transactions. We cannot assure you that we
will be successful in overcoming problems encountered in connection with any transactions, and our inability to do so could significantly
harm our business, results of operations and financial condition. These transactions could dilute a stockholder’s investment
in us and cause us to incur debt, contingent liabilities and amortization/impairment charges related to intangible assets, all
of which could materially and adversely affect our business, results of operations and financial condition. In addition, our effective
tax rate for future periods could be negatively impacted by the EGEN acquisition or potential future transactions.

Our
business depends on license agreements with third parties to permit us to use patented technologies. The loss of any of our rights
under these agreements could impair our ability to develop and market our products.

Our
success will depend, in a substantial part, on our ability to maintain our rights under license agreements granting us rights
to use patented technologies. For instance, we are party to license agreements with Duke University, under which we have exclusive
rights to commercialize medical treatment products and procedures based on Duke’s thermo-sensitive liposome technology.
The Duke University license agreement contains a license fee, royalty and/or research support provisions, testing and regulatory
milestones, and other performance requirements that we must meet by certain deadlines. If we breach any provisions of the license
and research agreements, we may lose our ability to use the subject technology, as well as compensation for our efforts in developing
or exploiting the technology. Any such loss of rights and access to technology could have a material adverse effect on our business.

Further,
we cannot guarantee that any patent or other technology rights licensed to us by others will not be challenged or circumvented
successfully by third parties, or that the rights granted will provide adequate protection. We may be required to alter any of
our potential products or processes or enter into a license and pay licensing fees to a third party or cease certain activities.
There can be no assurance that we can obtain a license to any technology that we determine we need on reasonable terms, if at
all, or that we could develop or otherwise obtain alternate technology. If a license is not available on commercially reasonable
terms or at all, our business, results of operations, and financial condition could be significantly harmed, and we may be prevented
from developing and commercializing the product. Litigation, which could result in substantial costs, may also be necessary to
enforce any patents issued to or licensed by us or to determine the scope and validity of another’s claimed proprietary
rights.

If
any of our pending patent applications do not issue, or are deemed invalid following issuance, we may lose valuable intellectual
property protection.

The
patent positions of pharmaceutical and biotechnology companies, such as ours, are uncertain and involve complex legal and factual
issues. We own various U.S. and international patents and have pending U.S. and international patent applications that cover various
aspects of our technologies. There can be no assurance that patents that have issued will be held valid and enforceable in a court
of law through the entire patent term. Even for patents that are held valid and enforceable, the legal process associated with
obtaining such a judgment is time consuming and costly. Additionally, issued patents can be subject to opposition, interferences
or other proceedings that can result in the revocation of the patent or maintenance of the patent in amended form (and potentially
in a form that renders the patent without commercially relevant or broad coverage). Further, our competitors may be able to circumvent
and otherwise design around our patents. Even if a patent is issued and enforceable, because development and commercialization
of pharmaceutical products can be subject to substantial delays, patents may expire early and provide only a short period of protection,
if any, following the commercialization of products encompassed by our patents. We may have to participate in interference proceedings
declared by the U.S. Patent and Trademark Office, which could result in a loss of the patent and/or substantial cost to us.

We
have filed patent applications, and plan to file additional patent applications, covering various aspects of our technologies
and our proprietary product candidates. There can be no assurance that the patent applications for which we apply would actually
issue as patents or do so with commercially relevant or broad coverage. The coverage claimed in a patent application can be significantly
reduced before the patent is issued. The scope of our claim coverage can be critical to our ability to enter into licensing transactions
with third parties and our right to receive royalties from our collaboration partnerships. Since publication of discoveries in
scientific or patent literature often lags behind the date of such discoveries, we cannot be certain that we were the first inventor
of inventions covered by our patents or patent applications. In addition, there is no guarantee that we will be the first to file
a patent application directed to an invention.

31

An
adverse outcome in any judicial proceeding involving intellectual property, including patents, could subject us to significant
liabilities to third parties, require disputed rights to be licensed from or to third parties or require us to cease using the
technology in dispute. In those instances where we seek an intellectual property license from another, we may not be able to obtain
the license on a commercially reasonable basis, if at all, thereby raising concerns on our ability to freely commercialize our
technologies or products.

We
rely on trade secret protection and other unpatented proprietary rights for important proprietary technologies, and any loss of
such rights could harm our business, results of operations and financial condition.

We
rely on trade secrets and confidential information that we seek to protect, in part, by confidentiality agreements with our corporate
partners, collaborators, employees and consultants. We cannot assure you that these agreements are adequate to protect our trade
secrets and confidential information or will not be breached or, if breached, we will have adequate remedies. Furthermore, others
may independently develop substantially equivalent confidential and proprietary information or otherwise gain access to our trade
secrets or disclose such technology. Any loss of trade secret protection or other unpatented proprietary rights could harm our
business, results of operations and financial condition.

Our
products may infringe patent rights of others, which may require costly litigation and, if we are not successful, could cause
us to pay substantial damages or limit our ability to commercialize our products.

Our
commercial success depends on our ability to operate without infringing the patents and other proprietary rights of third parties.
There may be third party patents that relate to our products and technology. We may unintentionally infringe upon valid patent
rights of third parties. Although we currently are not involved in any material litigation involving patents, a third-party patent
holder may assert a claim of patent infringement against us in the future. Alternatively, we may initiate litigation against the
third-party patent holder to request that a court declare that we are not infringing the third party’s patent and/or that
the third party’s patent is invalid or unenforceable. If a claim of infringement is asserted against us and is successful,
and therefore we are found to infringe, we could be required to pay damages for infringement, including treble damages if it is
determined that we knew or became aware of such a patent and we failed to exercise due care in determining whether or not we infringed
the patent. If we have supplied infringing products to third parties or have licensed third parties to manufacture, use or market
infringing products, we may be obligated to indemnify these third parties for damages they may be required to pay to the patent
holder and for any losses they may sustain.

We
can also be prevented from selling or commercializing any of our products that use the infringing technology in the future, unless
we obtain a license from such third party. A license may not be available from such third party on commercially reasonable terms
or may not be available at all. Any modification to include a non-infringing technology may not be possible, or if possible, may
be difficult or time-consuming to develop, and require revalidation, which could delay our ability to commercialize our products.
Any infringement action asserted against us, even if we are ultimately successful in defending against such action, would likely
delay the regulatory approval process of our products, harm our competitive position, be expensive and require the time and attention
of our key management and technical personnel.

We
rely on third parties to conduct all of our clinical trials. If these third parties are unable to carry out their contractual
duties in a manner that is consistent with our expectations, comply with budgets and other financial obligations or meet expected
deadlines, we may not receive certain development milestone payments or be able to obtain regulatory approval for or commercialize
our product candidates in a timely or cost-effective manner.

We
do not independently conduct clinical trials for our drug candidates. We rely, and expect to continue to rely, on third-party
clinical investigators, clinical research organizations (CROs), clinical data management organizations and consultants to design,
conduct, supervise and monitor our clinical trials.

Because
we do not conduct our own clinical trials, we must rely on the efforts of others and have reduced control over aspects of these
activities, including, the timing of such trials, the costs associated with such trials and the procedures that are followed for
such trials. We do not expect to significantly increase our personnel in the foreseeable future and may continue to rely on third
parties to conduct all of our future clinical trials. If we cannot contract with acceptable third parties on commercially reasonable
terms or at all, if these third parties are unable to carry out their contractual duties or obligations in a manner that is consistent
with our expectations or meet expected deadlines, if they do not carry out the trials in accordance with budgeted amounts, if
the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols
or for other reasons, or if they fail to maintain compliance with applicable government regulations and standards, our clinical
trials may be extended, delayed or terminated or may become significantly more expensive, we may not receive development milestone
payments when expected or at all, and we may not be able to obtain regulatory approval for or successfully commercialize our product
candidates.

32

Despite
our reliance on third parties to conduct our clinical trials, we are ultimately responsible for ensuring that each of our clinical
trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires
clinical trials to be conducted in accordance with good clinical practices for conducting, recording and reporting the results
of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality
of clinical trial participants are protected. We also are required to register ongoing clinical trials and post the results of
completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure
to do so can result in fines, adverse publicity and civil and criminal sanctions. Our reliance on third parties that we do not
control does not relieve us of these responsibilities and requirements. If we or a third party we rely on fails to meet these
requirements, we may not be able to obtain, or may be delayed in obtaining, marketing authorizations for our drug candidates and
will not be able to, or may be delayed in our efforts to, successfully commercialize our drug candidates. This could have a material
adverse effect on our business, financial condition, results of operations and prospects.

Because
we rely on third party manufacturing and supply partners, our supply of research and development, preclinical and clinical development
materials may become limited or interrupted or may not be of satisfactory quantity or quality.

We
rely on third party supply and manufacturing partners to supply the materials and components for, and manufacture, our research
and development, preclinical and clinical trial drug supplies. We do not own manufacturing facilities or supply sources for such
components and materials. There can be no assurance that our supply of research and development, preclinical and clinical development
drugs and other materials will not be limited, interrupted, restricted in certain geographic regions or of satisfactory quality
or continue to be available at acceptable prices. Suppliers and manufacturers must meet applicable manufacturing requirements
and undergo rigorous facility and process validation tests required by FDA and foreign regulatory authorities in order to comply
with regulatory standards, such as current Good Manufacturing Practices. In the event that any of our suppliers or manufacturers
fails to comply with such requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if
our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to manufacture
the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another
third party, which we may not be able to do on reasonable terms, if at all.

Our
business is subject to numerous and evolving state, federal and foreign regulations and we may not be able to secure the government
approvals needed to develop and market our products.

Our
research and development activities, pre-clinical tests and clinical trials, and ultimately the manufacturing, marketing and labeling
of our products, are all subject to extensive regulation by the FDA and foreign regulatory agencies. Pre-clinical testing and
clinical trial requirements and the regulatory approval process typically take years and require the expenditure of substantial
resources. Additional government regulation may be established that could prevent or delay regulatory approval of our product
candidates. Delays or rejections in obtaining regulatory approvals would adversely affect our ability to commercialize any product
candidates and our ability to generate product revenue or royalties.

The
FDA and foreign regulatory agencies require that the safety and efficacy of product candidates be supported through adequate and
well-controlled clinical trials. If the results of pivotal clinical trials do not establish the safety and efficacy of our product
candidates to the satisfaction of the FDA and other foreign regulatory agencies, we will not receive the approvals necessary to
market such product candidates. Even if regulatory approval of a product candidate is granted, the approval may include significant
limitations on the indicated uses for which the product may be marketed.

We
are subject to the periodic inspection of our clinical trials, facilities, procedures and operations and/or the testing of our
products by the FDA to determine whether our systems and processes, or those of our vendors and suppliers, are in compliance with
FDA regulations. Following such inspections, the FDA may issue notices on Form 483 and warning letters that could cause us to
modify certain activities identified during the inspection.

Failure
to comply with the FDA and other governmental regulations can result in fines, unanticipated compliance expenditures, recall or
seizure of products, total or partial suspension of production and/or distribution, suspension of the FDA’s review of product
applications, enforcement actions, injunctions and criminal prosecution. Under certain circumstances, the FDA also has the authority
to revoke previously granted product approvals. Although we have internal compliance programs, if these programs do not meet regulatory
agency standards or if our compliance is deemed deficient in any significant way, it could have a material adverse effect on the
Company.

33

We
are also subject to recordkeeping and reporting regulations. These regulations require, among other things, the reporting to the
FDA of adverse events alleged to have been associated with the use of a product or in connection with certain product failures.
Labeling and promotional activities also are regulated by the FDA. We must also comply with record keeping requirements as well
as requirements to report certain adverse events involving our products. The FDA can impose other post-marketing controls on us
as well as our products including, but not limited to, restrictions on sale and use, through the approval process, regulations
and otherwise.

Many
states in which we do or may do business, or in which our products may be sold, if at all, impose licensing, labeling or certification
requirements that are in addition to those imposed by the FDA. There can be no assurance that one or more states will not impose
regulations or requirements that have a material adverse effect on our ability to sell our products.

In
many of the foreign countries in which we may do business or in which our products may be sold, we will be subject to regulation
by national governments and supranational agencies as well as by local agencies affecting, among other things, product standards,
packaging requirements, labeling requirements, import restrictions, tariff regulations, duties and tax requirements. There can
be no assurance that one or more countries or agencies will not impose regulations or requirements that could have a material
adverse effect on our ability to sell our products.

We
have obtained Orphan Drug Designation for ThermoDox® and may seek Orphan Drug Designation for other product candidates, but
we may be unsuccessful or may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential
for market exclusivity.

ThermoDox®
has been granted orphan drug designation for primary liver cancer in both the U.S. and Europe. As part of our business strategy,
we may seek Orphan Drug Designation for other product candidates, but we may be unsuccessful. Regulatory authorities in some jurisdictions,
including the U.S. and Europe, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan
Drug Act, the FDA may designate a drug as an orphan drug if it is a drug intended to treat a rare disease or condition, which
is generally defined as a patient population of fewer than 200,000 individuals annually in the U.S., or a patient population greater
than 200,000 in the U.S. where there is no reasonable expectation that the cost of developing the drug will be recovered from
sales in the U.S.

Even
though we have obtained Orphan Drug Designation for ThermoDox® and may obtain such designation for other product candidates
in specific indications, we may not be the first to obtain marketing approval of these product candidates for the orphan-designated
indication due to the uncertainties associated with developing pharmaceutical products. In addition, exclusive marketing rights
in the U.S. may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost
if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure
sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Further, even if we obtain
orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different
drugs with different active moieties can be approved for the same condition. Even after an orphan product is approved, the FDA
can subsequently approve the same drug with the same active moiety for the same condition if the FDA concludes that the later
drug is safer, more effective or makes a major contribution to patient care. Orphan Drug Designation neither shortens the development
time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. In addition,
while we may seek Orphan Drug Designation for other product candidates, we may never receive such designations.

Fast
Track designation may not actually lead to a faster development or regulatory review or approval process.

ThermoDox®
has received U.S. FDA Fast Track Designation. However, we may not experience a faster development process, review, or approval
compared to conventional FDA procedures. The FDA may withdraw our Fast Track designation if the FDA believes that the designation
is no longer supported by data from our clinical or pivotal development program. Our Fast Track designation does not guarantee
that we will qualify for or be able to take advantage of the FDA’s expedited review procedures or that any application that
we may submit to the FDA for regulatory approval will be accepted for filing or ultimately approved.

34

Our
relationships with healthcare providers and physicians and third-party payors will be subject to applicable anti-kickback, fraud
and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual
damages, reputational harm and diminished profits and future earnings.

Healthcare
providers, physicians and third-party payors in the United States and elsewhere play a primary role in the recommendation and
prescription of biopharmaceutical products. Arrangements with third-party payors and customers can expose biopharmaceutical manufacturers
to broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback
Statute and the federal False Claims Act, which may constrain the business or financial arrangements and relationships through
which such companies sell, market and distribute biopharmaceutical products. In particular, the research of our product candidates,
as well as the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the
healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring
and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these
laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials. The applicable
federal, state and foreign healthcare laws and regulations laws that may affect our ability to operate include, but are not limited
to:

●

the
federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering
or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash
or in kind, to induce or reward, or in return for, either the referral of an individual, or the purchase, lease, order or
recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal
healthcare program, such as the Medicare and Medicaid programs. A person or entity can be found guilty of violating the statute
without actual knowledge of the statute or specific intent to violate it. In addition, a claim submitted for payment to any
federal health care program that includes items or services that were made as a result of a violation of the federal Anti-Kickback
Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act, or FCA. The Anti-Kickback Statute
has been interpreted to apply to arrangements between biopharmaceutical manufacturers on the one hand and prescribers, purchasers,
and formulary managers, among others, on the other. There are a number of statutory exceptions and regulatory safe harbors
protecting some common activities from prosecution;

●

the
federal civil and criminal false claims laws, including the FCA, and civil monetary penalty laws which prohibit,
among other things, individuals or entities from knowingly presenting, or causing to be presented, false, fictious or fraudulent
claims for payment to, or approval by Medicare, Medicaid, or other federal healthcare programs; knowingly making, using or
causing to be made or used a false record or statement material to a false or fraudulent claim or an obligation to pay or
transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing
or concealing an obligation to pay money to the federal government. A claim that includes items or services resulting from
a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim under the FCA. Manufacturers can
be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause”
the submission of false or fraudulent claims. The FCA also permits a private individual acting as a “whistleblower”
to bring qui tam actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;

●

the
federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes
that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program
or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by,
or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and
knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially
false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare
matters. Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual
knowledge of the statute or specific intent to violate it;

●

HIPAA,
as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective
implementing regulations, which impose, among other things, requirements relating to the privacy, security and transmission
of individually identifiable health information on certain covered healthcare providers, health plans, and healthcare clearinghouses,
known as covered entities, as well as their respective “business associates,” those independent contractors or
agents of covered entities that perform services for covered entities that involve the creation, use, receipt, maintenance
or disclosure of individually identifiable health information. HITECH also created new tiers of civil monetary penalties,
amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general
new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek
attorneys’ fees and costs associated with pursuing federal civil actions;

●

the
federal Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which require some manufacturers
of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s
Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other transfers
of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching
hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Effective
January 1, 2022, these reporting obligations will extend to include transfers of value made in the previous year to certain
non-physician providers such as physician assistants and nurse practitioners;

analogous
state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing
arrangements and claims involving healthcare items or services reimbursed by third-party payors, including private insurers,
and may be broader in scope than their federal equivalents; state and foreign laws that require biopharmaceutical companies
to comply with the biopharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance
promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential
referral sources; state and foreign laws that require drug manufacturers to report information related to payments and other
transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing; state and local laws
that require the registration of biopharmaceutical sales representatives; and state and foreign laws governing the privacy
and security of health information in certain circumstances, many of which differ from each other in significant ways and
often are not preempted by HIPAA, thus complicating compliance efforts.

35

The
distribution of biopharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping,
licensing, storage and security requirements intended to prevent the unauthorized sale of biopharmaceutical products.

The
scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare
reform, especially in light of the lack of applicable precedent and regulations. Ensuring business arrangements comply with applicable
healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming
and can divert a company’s attention from the business.

It
is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current
or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those
actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative
penalties, damages, fines, disgorgement, imprisonment, reputational harm, possible exclusion from participation in federal and
state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional
reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations
of non-compliance with these laws. Further, if any of the physicians or other healthcare providers or entities with whom we expect
to do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or administrative
sanctions, including exclusions from government funded healthcare programs. Any action for violation of these laws, even if successfully
defended, could cause a biopharmaceutical manufacturer to incur significant legal expenses and divert management’s attention
from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially
affect business in an adverse way.

Ongoing
legislative and regulatory changes affecting the healthcare industry could have a material adverse effect on our business.

Political,
economic and regulatory influences are subjecting the healthcare industry to potential fundamental changes that could substantially
affect our results of operations by requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions
or modifications to product labeling; (iii) the recall or discontinuation of our products; or (iv) additional record-keeping
requirements.

In
the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example,
in March 2010, the ACA was passed, which substantially changed the way health care is financed by both governmental and private
insurers, and significantly impacted the U.S. biopharmaceutical industry. The ACA, among other things, addressed a new methodology
by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused,
instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate
Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees
and taxes on manufacturers of certain branded prescription drugs, and created a new Medicare Part D coverage gap discount program,
in which manufacturers must agree to offer 70% (increased pursuant to the Bipartisan Budget Act of 2018, effective as of 2019)
point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period,
as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.

Since its enactment, some of the provisions
of the ACA have yet to be fully implemented, while certain provisions have been subject to judicial, congressional, and executive
challenges. As a result, there have been delays in the implementation of, and action taken to repeal or replace, certain aspects
of the ACA. Since January 2017, President Trump has signed two Executive Orders designed to delay the implementation of certain
provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. One Executive
Order directs federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or
delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare
providers, health insurers, or manufacturers of pharmaceuticals or medical devices. The second Executive Order terminates the
cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys General filed suit to stop the administration
from terminating the subsidies, but their request for a restraining order was denied by a federal judge in California on October
25, 2017. The loss of the cost share reduction payments is expected to increase premiums on certain policies issued by qualified
health plans under the ACA. Further, on June 14, 2018, U.S. Court of Appeals for the Federal Circuit ruled that the federal government
was not required to pay more than $12 billion in ACA risk corridor payments to third-party payors who argued were owed to them.
On December 10, 2019, the U.S. Supreme Court heard arguments in Moda Health Plan, Inc. v. United States, which will determine
whether the government must make risk corridor payments. The U.S. Supreme Court’s decision will be released in the coming
months, but we cannot predict how the U.S. Supreme Court will rule. The effects of this gap in reimbursement on third-party payors,
the viability of the ACA marketplace, providers, and potentially our business, are not yet known. While Congress has not passed
comprehensive repeal legislation, it has enacted laws that modify certain provisions of the Affordable Care Act such as removing
penalties, starting January 1, 2019, for not complying with the Affordable Care Act’s individual mandate to carry health
insurance, delaying the implementation of certain Affordable Care Act-mandated fees, and increasing the point-of-sale discount
that is owed by pharmaceutical manufacturers who participate in Medicare Part D. On December 14, 2018, a Texas U.S. District Court
Judge ruled that the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress
as part of the Tax Cuts and Jobs Act of 2017. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit
upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court
to determine whether the remaining provisions of the ACA are invalid as well. On March 2, 2020, the United States Supreme Court
granted the petitions for writs of certiorari to review this case, and has allotted one hour for oral arguments, which are expected
to occur in the fall. We cannot predict what affect further changes to the ACA would have on our business.

36

Other
legislative changes have been proposed and adopted in the United States since the ACA was enacted. The Budget Control Act of 2011,
among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked
with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach
required goals, thereby triggering the legislation’s automatic reduction to several government programs, including aggregate
reductions of Medicare payments to providers of 2% per fiscal year. These reductions went into effect on April 1, 2013 and, due
to subsequent legislative amendments to the statute, including the Bipartisan Budget Act of 2018, or BBA, will remain in effect
through 2029, unless additional congressional action is taken. The BBA also amended the ACA, effective January 1, 2019, by increasing
the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and closing the coverage
gap in most Medicare drug plans, commonly referred to as the “donut hole”. On January 2, 2013, the American Taxpayer
Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers,
including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government
to recover overpayments to providers from three to five years.

Moreover,
increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may
cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they
may not cover or provide adequate payment for our product candidates. There has been increasing legislative and enforcement interest
in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional
inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug
pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient
programs, and reform government program reimbursement methodologies for drugs. Several states have adopted price transparency
requirements and those as well as any future federal price transparency requirements that may be implemented in the future could
have a negative effect on our business. Additionally, we expect to experience pricing pressures in connection with the sale of
any future approved product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance
organizations, cost containment initiatives and additional legislative changes.

At
the federal level, the Trump administration’s budget for fiscal year 2021 includes a $135 billion allowance to support legislative
proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient
access to lower-cost generic and biosimilar drugs. The Trump administration previously released a “Blueprint” to lower
drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase manufacturer competition, increase
the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products
and reduce the out of pocket costs of drug products paid by consumers. The U.S. Department of Health and Human Services, or HHS,
has solicited feedback on some of these measures and has implemented others under its existing authority. For example, in May
2019, CMS issued a final rule that would allow Medicare Advantage Plans the option of using step therapy, a type of prior authorization,
for Part B drugs beginning January 1, 2020. This final rule codified CMS’s policy change that was effective January 1, 2019.
Although a number of these and other measures may require additional authorization to become effective, Congress and the Trump
administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug
costs. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments
from private payers. In addition, individual states in the United States have also increasingly passed legislation and implemented
regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts,
restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to
encourage importation from other countries and bulk purchasing.

At
the state level, legislatures are increasingly passing legislation and implementing regulations designed to control biopharmaceutical
and biologic product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product
access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other
countries and bulk purchasing.

We
cannot predict what healthcare reform initiatives may be adopted
in the future. Further, federal and state legislative and regulatory developments are likely, and we expect ongoing initiatives
in the United States to increase pressure on drug pricing. Such reforms could have an adverse effect on anticipated revenues from
reloxaliase and any other product candidates that we may successfully develop and for which we may obtain regulatory approval
and may affect our overall financial condition and ability to develop product candidates.

We
may fail to comply with evolving European and other privacy laws.

Since
we conduct clinical trials in the European Economic Area (“EEA”), we are subject to additional European data-privacy
laws. The General Data Protection Regulation, (EU) 2016/679 (“GDPR”) became effective on May 25, 2018 and deals with
the processing of personal data and on the free movement of such data. The GDPR imposes a broad range of strict requirements on
companies subject to the GDPR, including requirements relating to having legal bases for processing personal information relating
to identifiable individuals and transferring such information outside the EEA, including to the United States, providing details
to those individuals regarding the processing of their personal information, keeping personal information secure, having data
processing agreements with third parties who process personal information, responding to individuals’ requests to exercise
their rights in respect of their personal information, reporting security breaches involving personal data to the competent national
data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments,
and record-keeping. The GDPR increases substantially the penalties to which we could be subject in the event of any non-compliance,
including fines of up to 10,000,000 Euros or up to 2% of our total worldwide annual turnover for certain comparatively minor offenses,
or up to 20,000,000 Euros or up to 4% of our total worldwide annual turnover for more serious offenses. Given the limited enforcement
of the GDPR to date, we face uncertainty as to the exact interpretation of the new requirements on our trials and we may be unsuccessful
in implementing all measures required by data protection authorities or courts in interpretation of the new law.

37

In
particular, national laws of member states of the EU are in the process of being adapted to the requirements under the GDPR, thereby
implementing national laws which may partially deviate from the GDPR and impose different obligations from country to country,
so that we do not expect to operate in a uniform legal landscape in the EEA. Also, as it relates to processing and transfer of
genetic data, the GDPR specifically allows national laws to impose additional and more specific requirements or restrictions,
and European laws have historically differed quite substantially in this field, leading to additional uncertainty. Further,
the United Kingdom’s decision to leave the EU, often referred to as Brexit, has created uncertainty with regard to data
protection regulation in the United Kingdom. In particular, it is unclear how data transfers to and from the United Kingdom will
be regulated now that the United Kingdom has left the EU.

In
the event we continue to conduct clinical trials in the EEA, we must also ensure that we maintain adequate safeguards to enable
the transfer of personal data outside of the EEA, in particular to the United States, in compliance with European data protection
laws. We expect that we will continue to face uncertainty as to whether our efforts to comply with our obligations under European
privacy laws will be sufficient. If we are investigated by a European data protection authority, we may face fines and other penalties.
Anype1 such investigation or charges by European data protection authorities could have a negative effect on our existing business
and on our ability to attract and retain new clients or pharmaceutical partners. We may also experience hesitancy, reluctance,
or refusal by European or multi-national clients or pharmaceutical partners to continue to use our products and solutions due
to the potential risk exposure as a result of the current (and, in particular, future) data protection obligations imposed on
them by certain data protection authorities in interpretation of current law, including the GDPR. Such clients or pharmaceutical
partners may also view any alternative approaches to compliance as being too costly, too burdensome, too legally uncertain, or
otherwise objectionable and therefore decide not to do business with us. Any of the foregoing could materially harm our business,
prospects, financial condition and results of operations

The
success of our products may be harmed if the government, private health insurers and other third-party payers do not provide sufficient
coverage or reimbursement.

Our
ability to commercialize our new cancer treatment systems successfully will depend in part on the extent to which reimbursement
for the costs of such products and related treatments will be available from third-party payors, which include government authorities
such as Medicare, Medicaid, TRICARE, and the Veterans Administration, managed care providers, private health insurers, and other
organizations. Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse
all or part of the costs associated with their treatment. Coverage and adequate reimbursement from governmental healthcare programs,
such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Patients are unlikely to use our product
candidates unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost. The reimbursement
status of newly approved medical products is subject to significant uncertainty We cannot be sure that coverage and reimbursement
will be available for, or accurately estimate the potential revenue from, our product candidates or assure that coverage and reimbursement
will be available for any product that we may develop.

Government
authorities and other third-party payors decide which drugs and treatments they will cover and the amount of reimbursement. In
the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare
& Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services. CMS decides whether and to
what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial
degree. No uniform policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage
and reimbursement for drug products can differ significantly from payor to payor. The process for determining whether a third-party
payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the
payor will pay for the product once coverage is approved. Coverage and reimbursement by a third-party payor may depend upon a
number of factors, including the third-party payor’s determination that use of a product is:

●

a
covered benefit under its health plan;

●

safe,
effective and medically necessary;

●

appropriate
for the specific patient;

●

cost-effective;
and

●

neither
experimental nor investigational.

In order to secure coverage and reimbursement
for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to
demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain FDA or other
comparable regulatory approvals. Additionally, companies may also need to provide discounts to purchasers, private health plans
or government healthcare programs. Nonetheless, product candidates may not be considered medically necessary or cost effective.
A decision by a third-party payor not to cover a product could reduce physician utilization once the product is approved and have
a material adverse effect on sales, our operations and financial condition.

Government, private health insurers and other
third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement
for new therapeutic products approved for marketing by the FDA. For example, Congress passed the Affordable Care Act in 2010 which
enacted a number of reforms to expand access to health insurance while also reducing or constraining the growth of healthcare
spending, enhancing remedies against fraud and abuse, adding new transparency requirements for healthcare industries, and imposing
new taxes on fees on healthcare industry participants, among other policy reforms. Federal agencies, Congress and state legislatures
have continued to show interest in implementing cost containment programs to limit the growth of health care costs, including
price controls, price disclosures, restrictions on reimbursement and other fundamental changes to the healthcare delivery
system. In addition, in recent years, Congress has enacted various laws seeking to reduce the federal debt level and contain healthcare
expenditures, and the Medicare and other healthcare programs are frequently identified as potential targets for spending cuts.
New government legislation or regulations related to pricing or other fundamental changes to the healthcare delivery system as
well as a government or third-party payer decision not to approve pricing for, or provide adequate coverage or reimbursement of,
our product candidates hold the potential to severely limit market opportunities of such products. Accordingly, even if coverage
and reimbursement are provided by government, private health insurers and third-party payors for uses of our products, market
acceptance of these products would be adversely affected if the reimbursement available proves to be unprofitable for health care
providers.

Our
products may not achieve sufficient acceptance by the medical community to sustain our business.

The
commercial success of our products will depend upon their acceptance by the medical community and third-party payors as clinically
useful, cost effective and safe. Any of our drug candidates or similar product candidates being investigated by our competitors
may prove not to be effective in trial or in practice, cause adverse events or other undesirable side effects. Our testing and
clinical practice may not confirm the safety and efficacy of our product candidates or even if further testing and clinical practice
produce positive results, the medical community may view these new forms of treatment as effective and desirable or our efforts
to market our new products may fail. Market acceptance depends upon physicians and hospitals obtaining adequate reimbursement
rates from third-party payors to make our products commercially viable. Any of these factors could have an adverse effect on our
business, financial condition and results of operations.

38

The
commercial potential of a drug candidate in development is difficult to predict. If the market size for a new drug is significantly
smaller than we anticipate, it could significantly and negatively impact our revenue, results of operations and financial condition.

It
is very difficult to predict the commercial potential of product candidates due to important factors such as safety and efficacy
compared to other available treatments, including potential generic drug alternatives with similar efficacy profiles, changing
standards of care, third party payor reimbursement standards, patient and physician preferences, the availability of competitive
alternatives that may emerge either during the long drug development process or after commercial introduction, and the availability
of generic versions of our successful product candidates following approval by government health authorities based on the expiration
of regulatory exclusivity or our inability to prevent generic versions from coming to market by asserting our patents. If due
to one or more of these risks the market potential for a drug candidate is lower than we anticipated, it could significantly and
negatively impact the revenue potential for such drug candidate and would adversely affect our business, financial condition and
results of operations.

Several
of our current clinical trials are being conducted outside the United States, and the FDA may not accept data from trials conducted
in foreign locations.

Several
of our current clinical trials are being conducted outside the United States. Although the FDA may accept data from clinical trials
conducted outside the United States, acceptance of these data is subject to certain conditions imposed by the FDA. For example,
the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with ethical principles.
The trial population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population
and U.S. medical practice in ways that the FDA deems clinically meaningful. In general, the patient population for any clinical
trials conducted outside of the United States must be representative of the population for whom we intend to label the product
in the United States. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the
data will be dependent upon its determination that the trials also complied with all applicable U.S. laws and regulations. We
cannot assure you that the FDA will accept data from trials conducted outside of the United States. If the FDA does not accept
the data from such clinical trials, it would likely result in the need for additional trials, which would be costly and time-consuming
and delay or permanently halt our development of our product candidates.

We
have no internal sales or marketing capability. If we are unable to create sales, marketing and distribution capabilities or enter
into alliances with others possessing such capabilities to perform these functions, we will not be able to commercialize our products
successfully.

We
currently have no sales, marketing or distribution capabilities. We intend to market our products, if and when such products are
approved for commercialization by the FDA and foreign regulatory agencies, either directly or through other strategic alliances
and distribution arrangements with third parties. If we decide to market our products directly, we will need to commit significant
financial and managerial resources to develop a marketing and sales force with technical expertise and with supporting distribution,
administration and compliance capabilities. If we rely on third parties with such capabilities to market our products, we will
need to establish and maintain partnership arrangements, and there can be no assurance that we will be able to enter into third-party
marketing or distribution arrangements on acceptable terms or at all. To the extent that we do enter into such arrangements, we
will be dependent on our marketing and distribution partners. In entering into third-party marketing or distribution arrangements,
we expect to incur significant additional expenses and there can be no assurance that such third parties will establish adequate
sales and distribution capabilities or be successful in gaining market acceptance for our products and services.

Technologies
for the treatment of cancer are subject to rapid change, and the development of treatment strategies that are more effective than
our technologies could render our technologies obsolete.

Various
methods for treating cancer currently are, and in the future, are expected to be, the subject of extensive research and development.
Many possible treatments that are being researched, if successfully developed, may not require, or may supplant, the use of our
technologies. The successful development and acceptance of any one or more of these alternative forms of treatment could render
our technology obsolete as a cancer treatment method.

39

We
may not be able to hire or retain key officers or employees that we need to implement our business strategy and develop our product
candidates and business, including those purchased in the EGEN asset acquisition.

Our
success depends significantly on the continued contributions of our executive officers, scientific and technical personnel and
consultants, including those retained in the EGEN acquisition, and on our ability to attract additional personnel as we seek to
implement our business strategy and develop our product candidates and businesses. Our operations associated with the EGEN acquisition
are located in Huntsville, Alabama. Key employees may depart if we fail to successfully manage this additional business location
or in relation to any uncertainties or difficulties of integration with Celsion. We cannot guarantee that we will retain key employees
to the same extent that we and EGEN retained each of our own employees in the past, which could have a negative impact on our
business, results of operations and financial condition. Our integration of EGEN and ability to operate in the fields we acquired
from EGEN may be more difficult if we lose key employees. Additionally, during our operating history, we have assigned many essential
responsibilities to a relatively small number of individuals. However, as our business and the demands on our key employees expand,
we have been, and will continue to be, required to recruit additional qualified employees. The competition for such qualified
personnel is intense, and the loss of services of certain key personnel or our inability to attract additional personnel to fill
critical positions could adversely affect our business. Further, we do not carry “key man” insurance on any of our
personnel. Therefore, loss of the services of key personnel would not be ameliorated by the receipt of the proceeds from such
insurance.

Our
success will depend in part on our ability to grow and diversify, which in turn will require that we manage and control our growth
effectively.

Our
business strategy contemplates growth and diversification. Our ability to manage growth effectively will require that we continue
to expend funds to improve our operational, financial and management controls, reporting systems and procedures. In addition,
we must effectively expand, train and manage our employees. We will be unable to manage our business effectively if we are unable
to alleviate the strain on resources caused by growth in a timely and successful manner. There can be no assurance that we will
be able to manage our growth and a failure to do so could have a material adverse effect on our business.

We
face intense competition and the failure to compete effectively could adversely affect our ability to develop and market our products.

There
are many companies and other institutions engaged in research and development of various technologies for cancer treatment products
that seek treatment outcomes similar to those that we are pursuing. We believe that the level of interest by others in investigating
the potential of possible competitive treatments and alternative technologies will continue and may increase. Potential competitors
engaged in all areas of cancer treatment research in the U.S. and other countries include, among others, major pharmaceutical,
specialized technology companies, and universities and other research institutions. Most of our current and potential competitors
have substantially greater financial, technical, human and other resources, and may also have far greater experience than do we,
both in pre-clinical testing and human clinical trials of new products and in obtaining FDA and other regulatory approvals. One
or more of these companies or institutions could succeed in developing products or other technologies that are more effective
than the products and technologies that we have been or are developing, or which would render our technology and products obsolete
and non-competitive. Furthermore, if we are permitted to commence commercial sales of any of our products, we will also be competing,
with respect to manufacturing efficiency and marketing, with companies having substantially greater resources and experience in
these areas.

We
may be subject to significant product liability claims and litigation.

Our
business exposes us to potential product liability risks inherent in the testing, manufacturing and marketing of human therapeutic
products. We presently have product liability insurance limited to $10 million per incident and $10 million annually. If we were
to be subject to a claim in excess of this coverage or to a claim not covered by our insurance and the claim succeeded, we would
be required to pay the claim with our own limited resources, which could have a severe adverse effect on our business. Whether
or not we are ultimately successful in any product liability litigation, such litigation would harm the business by diverting
the attention and resources of our management, consuming substantial amounts of our financial resources and by damaging our reputation.
Additionally, we may not be able to maintain our product liability insurance at an acceptable cost, if at all.

40

We
or the third parties upon whom we depend may be adversely affected by earthquakes, global pandemics or other natural disasters
and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster, including earthquakes,
outbreak of disease or other natural disasters.

Our
current operations are located in our facilities in Lawrenceville, New Jersey. Any unplanned event, such as flood, fire, explosion,
earthquake, extreme weather condition, medical epidemics, power shortage, telecommunication failure or other natural or manmade
accidents or incidents that result in us being unable to fully utilize our facilities, or the manufacturing facilities of our
third-party contract manufacturers, may have a material and adverse effect on our ability to operate our business, particularly
on a daily basis, and have significant negative consequences on our financial and operating conditions. Loss of access to these
facilities may result in increased costs, delays in the development of our product candidates or interruption of our business
operations. Earthquakes or other natural disasters could further disrupt our operations and have a material and adverse effect
on our business, financial condition, results of operations and prospects. If a natural disaster, power outage or other event
occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure,
such as our research facilities or the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted
operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of
time. For example, in December 2019, an outbreak of a novel strain of coronavirus, or the COVID-19 coronavirus, originated in
Wuhan, China. To date, this outbreak has already resulted in extended shutdowns of certain businesses in the Wuhan region and
has had ripple effects to businesses around the world. An outbreak of communicable diseases in China or elsewhere, or the perception
that such an outbreak could occur, and the measures taken by the governments of countries affected, could adversely affect our
business, financial condition or results of operations by limiting our ability to manufacture products within or outside China,
forcing temporary closure of facilities that we rely upon or increasing the costs associated with obtaining clinical supplies
of our product candidates. The extent to which the COVID-19 coronavirus impacts our results will depend on future developments,
which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity
of the COVID-19 coronavirus and the actions to contain the COVID-19 coronavirus or treat its impact, among others. Global health
concerns, such as the COVID-19 coronavirus, could also result in social, economic, and labor instability in the countries in which
we or the third parties with whom we engage operate.

The
disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar
event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans,
which, could have a material adverse effect on our business. As part of our risk management policy, we maintain insurance coverage
at levels that we believe are appropriate for our business. However, in the event of an accident or incident at these facilities,
we cannot assure you that the amounts of insurance will be sufficient to satisfy any damages and losses. If our facilities, or
the manufacturing facilities of our third-party contract manufacturers, are unable to operate because of an accident or incident
or for any other reason, even for a short period of time, any or all of our research and development programs may be harmed.

Our
internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which
could result in a material disruption of our product development programs.

Despite
the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants
are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and
electrical failures. Such events could cause interruptions of our operations. For instance, the loss of preclinical data or data
from any clinical trial involving our product candidates could result in delays in our development and regulatory filing efforts
and significantly increase our costs. To the extent that any disruption or privacy or security breach were to result in a loss
of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could be subject to reputational
harm, monetary fines, civil suits, civil penalties or criminal sanctions and requirements to disclose the breach, and other forms
of liability and the development of our product candidates could be delayed.

Pandemics
such as the COVID-19 coronavirus could have an adverse impact on our developmental programs and our financial condition.

In
December 2019, a novel strain of the COVID-19 coronavirus was first identified in Wuhan, Hubei Province, China. Any outbreak of
contagious diseases, or other adverse public health developments, could have a material and adverse effect on our business operations.
These could include disruptions or restrictions on our ability to travel, pursue partnerships and other business transactions,
conduct clinical trials, make shipments of biologic materials, as well as be impacted by the temporary closure of the facilities
of suppliers and clinical trial sites. Any disruption of suppliers, clinical trial sites or access to patients would likely impact
our clinical trial enrollment progress and rates as well as our ability to access capital through the financial markets. The extent
to which the COVID-19 coronavirus impacts our business will depend on future developments, which are highly uncertain and cannot
be predicted, including new information which may emerge concerning the severity of the COVID-19 coronavirus and the actions to
contain the COVID-19 coronavirus or treat its impact, among others.

41

RISKS
RELATED TO OUR SECURITIES

The
market price of our common stock has been, and may continue to be volatile and fluctuate significantly, which could result in
substantial losses for investors and subject us to securities class action litigation.

The
trading price for our common stock has been, and we expect it to continue to be, volatile. The price at which our common stock
trades depends upon a number of factors, including our historical and anticipated operating results, our financial situation,
announcements of technological innovations or new products by us or our competitors, our ability or inability to raise the additional
capital we may need and the terms on which we raise it, and general market and economic conditions. Some of these factors are
beyond our control. Broad market fluctuations may lower the market price of our common stock and affect the volume of trading
in our stock, regardless of our financial condition, results of operations, business or prospect. The closing price of our common
stock as reported on The Nasdaq Capital Market had a high price of $3.48 and a low price of $1.35 in the 52-week period ended
December 31, 2018, a high price of $2.47 and a low price of $1.08 in the 52-week period ended December 31, 2019, and a high price
of $1.73 and a low price of $0.72 from January 1, 2020 through March 24, 2020. Among the factors that may cause the market
price of our common stock to fluctuate are the risks described in this “Risk Factors” section and other factors, including:

●

results
of preclinical and clinical studies of our product candidates or those of our competitors;

●

regulatory
or legal developments in the U.S. and other countries, especially changes in laws and regulations applicable to our product
candidates;

●

actions
taken by regulatory agencies with respect to our product candidates, clinical studies, manufacturing process or sales and
marketing terms;

●

introductions
and announcements of new products by us or our competitors, and the timing of these introductions or announcements;

●

announcements
by us or our competitors of significant acquisitions or other strategic transactions or capital commitments;

●

fluctuations
in our quarterly operating results or the operating results of our competitors;

●

variance
in our financial performance from the expectations of investors;

●

changes
in the estimation of the future size and growth rate of our markets;

●

changes
in accounting principles or changes in interpretations of existing principles, which could affect our financial results;

●

failure
of our products to achieve or maintain market acceptance or commercial success;

●

conditions
and trends in the markets we serve;

●

changes
in general economic, industry and market conditions;

●

success
of competitive products and services;

●

changes
in market valuations or earnings of our competitors;

●

changes
in our pricing policies or the pricing policies of our competitors;

●

changes
in legislation or regulatory policies, practices or actions;

●

the
commencement or outcome of litigation involving our company, our general industry or both;

●

recruitment
or departure of key personnel;

42

●

changes
in our capital structure, such as future issuances of securities or the incurrence of additional debt;

In
addition, the stock markets, in general, The Nasdaq Capital Market and the market for pharmaceutical companies in particular,
may experience a loss of investor confidence. Such loss of investor confidence may result in extreme price and volume fluctuations
in our common stock that are unrelated or disproportionate to the operating performance of our business, financial condition or
results of operations. These broad market and industry factors may materially harm the market price of our common stock and expose
us to securities class action litigation. Such litigation, even if unsuccessful, could be costly to defend and divert management’s
attention and resources, which could further materially harm our financial condition and results of operations.

Future
sales of our common stock in the public market could cause our stock price to fall.

Sales
of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could
depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity
securities. As of March 24, 2020, we had 29,257,101 shares of common stock outstanding, all of which, other than shares
held by our directors and certain officers, were eligible for sale in the public market, subject in some cases to compliance with
the requirements of Rule 144, including the volume limitations and manner of sale requirements. In addition, all of the shares
of common stock issuable upon exercise of warrants will be freely tradable without restriction or further registration upon issuance.

Our
stockholders may experience significant dilution as a result of future equity offerings or issuances and exercise of outstanding
options and warrants.

In
order to raise additional capital or pursue strategic transactions, we may in the future offer, issue or sell additional shares
of our common stock or other securities convertible into or exchangeable for our common stock, including the issuance of common
stock in relation to the achievement, if any, of milestones triggering our payment of earn-out consideration in connection with
the EGEN acquisition. Our stockholders may experience significant dilution as a result of future equity offerings or issuances.
Investors purchasing shares or other securities in the future could have rights superior to existing stockholders. As of March
24, 2020, we have a significant number of securities convertible into, or allowing the purchase of, our common stock, including
3,826,098 shares of common stock issuable upon exercise of warrants outstanding, 4,786,747 options to purchase shares of our common
stock and restricted stock awards outstanding, and 4,152 shares of common stock reserved for future issuance under our stock incentive
plan.

Adverse
capital and credit market conditions could affect our ability to meet liquidity needs, as well as our access to capital and cost
of capital. The capital and credit markets have experienced extreme volatility and disruption in recent years. Our results of
operations, financial condition, cash flows and capital position could be materially adversely affected by continued disruptions
in the capital and credit markets.

Our
ability to use net operating losses to offset future taxable income are subject to certain limitations.

On
December 22, 2017, the President of the United States signed into law the Tax Reform Act. The Tax Reform Act significantly changes
U.S. tax law by, among other things, lowering corporate income tax rates, implementing a quasi-territorial tax system, providing
a one-time transition toll charge on foreign earnings, creating a new limitation on the deductibility of interest expenses and
modifying the limitation on officer compensation. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from
a maximum of 35% to a flat 21% rate, effective January 1, 2018. We currently have significant net operating losses (NOLs) that
may be used to offset future taxable income. In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the
Code), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its
pre-change NOLs to offset future taxable income. During 2019, 2018 and years prior, we performed analyses to determine if there
were changes in ownership, as defined by Section 382 of the Internal Revenue Code that would limit our ability to utilize certain
net operating loss and tax credit carry forwards. We determined we experienced ownership changes, as defined by Section 382, in
connection with certain common stock offerings in 2011, 2013, 2015, 2017 and 2018. As a result, the utilization of our federal
tax net operating loss carry-forwards generated prior to the ownership changes is limited. Future changes in our stock ownership,
some of which are outside of our control, could result in an ownership change under Section 382 of the Code, which would significantly
limit our ability to utilize NOLs to offset future taxable income.

43

We
have never paid cash dividends on our common stock in the past and do not anticipate paying cash dividends on our common stock
in the foreseeable future.

We
have never declared or paid cash dividends on our common stock. We do not anticipate paying any cash dividends on our common stock
in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and
growth of our business. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for the
foreseeable future for holders of our common stock.

Anti-takeover
provisions in our charter documents and Delaware law could prevent or delay a change in control.

Our
certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition that a stockholder may consider
favorable by authorizing the issuance of “blank check” preferred stock. This preferred stock may be issued by our
Board of Directors on such terms as it determines, without further stockholder approval. Therefore, our Board of Directors may
issue such preferred stock on terms unfavorable to a potential bidder in the event that our Board of Directors opposes a merger
or acquisition. In addition, our Board of Directors may discourage such transactions by increasing the amount of time necessary
to obtain majority representation on our Board of Directors. Certain other provisions of our bylaws and of Delaware law may also
discourage, delay or prevent a third party from acquiring or merging with us, even if such action were beneficial to some, or
even a majority, of our stockholders.

ITEM
1B.

UNRESOLVED
STAFF COMMENTS

None.

ITEM
2.

PROPERTIES

In
July 2011, we entered into a lease with Brandywine Operating Partnership, L.P., a Delaware limited partnership for a 10,870 square
foot premises located in Lawrenceville, New Jersey in connection with the relocation of our offices from Columbia, Maryland. In
late 2015, Lenox Drive Office Park LLC, purchased the real estate and office building and assumed the lease. Under the current
terms of the lease, which was amended effective May 1, 2017 and is set to expire on September 1, 2022, we reduced the size of
the premises to 7,565 square feet and are paying a monthly rent that ranges from approximately $18,900 in the first year to approximately
$20,500 in the final year of the amendment. On February 1, 2019, we amended the current terms of the lease to increase the size
of the premises by 2,285 square feet to 9,850 square feet and also extended the lease term by one year to September 1, 2023. In
conjunction with the February 1, 2019 lease amendment, we agreed to modify our one-time option to cancel the lease as of the 36th
month after the May 1, 2017 lease commencement date.

44

In
connection with the Asset Purchase Agreement, in June 2014, we assumed the existing lease with another landlord for an 11,500
square foot premises located in Huntsville, Alabama. In January 2018, we entered into a new 60-month lease agreement for 9,049
square feet with rent payments of approximately $18,100 per month.

Following
is a table of the lease payments and maturity of our operating lease liabilities as of December 31, 2019:

For the

years ending
December 31,

2020

$

525,809

2021

530,734

2022

535,579

2023

233,117

2024 and thereafter

-

Subtotal future lease payments

1,825,239

Less imputed interest

(293,789

)

Total lease liabilities

$

1,531,450

Weighted average remaining life

3.45 years

Weighted average discount rate

9.98

%

For
the year ended December 31, 2019, operating lease expense was $522,380 and cash paid for operating leases included in operating
cash flows was $485,848. For 2018, operating lease expense was $450,430 and cash paid for operating leases included in operating
cash flows was $457,321.

We
believe our existing facilities are suitable and adequate to conduct our business.

ITEM
3.

LEGAL
PROCEEDINGS

On
September 20, 2019, a purported stockholder of the Company filed a derivative and putative class action lawsuit in the Superior
Court of New Jersey, Chancery Division, against the Company (as both a class action defendant and nominal defendant), certain
officers and directors), with the caption O’Connor v. Braun et al., Docket No. MER-C-000068-19 (the “Shareholder
Action”). The Shareholder Action alleges breaches of the defendants’ fiduciary based on allegations that the Defendants
made or approved improper statements when seeking shareholder approval of the 2018 Stock Incentive Plan. The Shareholder Action
seeks, among other things, any damages sustained by the Company as a result of the defendants’ alleged wrongdoing, a declaratory
judgment against all defendants invalidating the 2018 Stock Incentive Plan and declaring any awards made under the Plan invalid,
rescinded, and subject to disgorgement, an order disgorging the equity awards granted to the individual defendants under the 2018
Stock Incentive Plan, and attorneys’ fees and costs.

Our
common stock trades on The Nasdaq Capital Market under the symbol “CLSN”.

Record
Holders

As
of March 24, 2020, there were approximately 12,200 stockholders of record of our common stock. The actual number of stockholders
may be greater than this number of record stockholders and includes stockholders who are beneficial owners but whose shares are
held in street name by brokers and other nominees. This number of stockholders of record also does not include stockholders whose
shares may be held in trust by other entities.

Dividend
Policy

We
have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain all of our future
earnings for use in the operation of our business and to fund future growth and do not anticipate paying any cash dividends in
the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our Board of Directors,
subject to applicable law, and will depend on our financial condition, results of operations, capital requirements, general business
conditions and other factors that our Board of Directors may deem relevant.

MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following discussions should be read in conjunction with our financial statements and related notes thereto included in this Annual
Report. The following discussion contains forward-looking statements made pursuant to the safe harbor provisions of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act
of 1995. These statements are based on our beliefs and expectations about future outcomes and are subject to risks and uncertainties
that could cause actual results to differ materially from anticipated results. Factors that could cause or contribute to such
differences include those described under “Part I, Item 1A - Risk Factors” appearing in this Annual Report
and factors described in other cautionary statements, cautionary language and risk factors set forth in other documents that we
file with the Securities and Exchange Commission. We undertake no obligation to publicly update forward-looking statements, whether
as a result of new information, future events or otherwise.

46

Overview

Celsion
is an integrated development clinical stage oncology drug company focused on advancing innovative cancer treatments, including
directed chemotherapies, DNA-mediated immunotherapy and RNA-based therapies. Our lead product candidate is ThermoDox®, a proprietary
heat-activated liposomal encapsulation of doxorubicin, currently in a Phase III clinical trial for the treatment of primary liver
cancer (the “OPTIMA Study”). Second in our product pipeline is GEN-1, a DNA-mediated immunotherapy for the localized
treatment of ovarian cancer. These investigational products are based on platform technologies that provide the basis for future
development of a range of therapeutics, largely focused on difficult-to-treat forms of cancer. The first platform technology is
Lysolipid Thermally Sensitive Liposomes, a heat sensitive liposomal based dosage form that is designed to target disease with
known chemotherapeutics in the presence of mild heat. The second platform technology is TheraPlas, a novel nucleic acid-based
investigational candidate under development for local transfection of therapeutic DNA plasmids. Employing these technologies,
we are working to develop and commercialize more efficient, effective and targeted oncology therapies that maximize efficacy while
minimizing side effects common to cancer treatments.

ThermoDox®

ThermoDox®
is being evaluated in a Phase III clinical trial for primary liver cancer, which we call the OPTIMA Study, which was initiated
in 2014. ThermoDox® is a liposomal encapsulation of doxorubicin, an approved and frequently used oncology drug for the treatment
of a wide range of cancers. Localized heat at hyperthermia temperatures (greater than 40° Celsius) releases the encapsulated
doxorubicin from the liposome enabling high concentrations of doxorubicin to be deposited preferentially in and around the targeted
tumor.

The
OPTIMA Study. The OPTIMA Study represents an evaluation of ThermoDox® in combination with a first line therapy, radio
frequency ablation (“RFA”), for newly diagnosed, intermediate stage HCC patients. HCC incidence globally is approximately
755,000 new cases per year and is the third largest cancer indication globally. Approximately 30% of newly diagnosed patients
can be addressed with RFA alone.

On
February 24, 2014, we announced that the United States Food and Drug Administration (the “FDA”) provided clearance
for the OPTIMA Study, which is a pivotal, double-blind, placebo-controlled Phase III trial of ThermoDox®, in combination with
standardized RFA, for the treatment of primary liver cancer. The trial design of the OPTIMA Study is based on the comprehensive
analysis of data from an earlier clinical trial conducted by the Company called the HEAT Study (the “HEAT Study”).
The OPTIMA Study is supported by a hypothesis developed from an overall survival analysis of a large subgroup of 285 patients
from the HEAT Study.

Post-hoc
data analysis from our earlier Phase III HEAT Study suggest that ThermoDox® may substantially improve OS, when compared to
the control group, in patients if their lesions undergo a 45-minute RFA procedure standardized for a lesion greater than 3 cm
in diameter. Data from nine OS sweeps have been conducted since the top line progression free survival (“PFS”) data
from the HEAT Study were announced in January 2013, with each data set demonstrating substantial improvement in clinical benefit
over the control group with statistical significance. On August 15, 2016, we announced updated results from its final retrospective
OS analysis of the data from the HEAT Study (the “HEAT Study subgroup”). These results demonstrated that in a large,
well bounded, subgroup of patients with a single lesion (n=285, 41% of the HEAT Study patients), treatment with a combination
of ThermoDox® and optimized RFA provided an average 54% risk improvement in OS compared to optimized RFA alone. The Hazard
Ratio (“HR”) at this analysis is 0.65 (95% CI 0.45 - 0.94) with a p-value of 0.02. Median OS for the ThermoDox®
subgroup has been reached which translates into a two-year survival benefit over the optimized RFA subgroup (projected to be greater
than 80 months for the ThermoDox® plus optimized RFA subgroup compared to less than 60 months projection for the optimized
RFA only subgroup).

While
this information should be viewed with caution since it is based on a retrospective analysis of a subgroup, we also conducted
additional analyses that further strengthen the evidence for the HEAT Study subgroup. We commissioned an independent computational
model at the University of South Carolina Medical School. The results unequivocally indicate that longer RFA heating times correlate
with significant increases in doxorubicin concentration around the RFA treated tissue. In addition, we conducted a prospective
preclinical study in 22 pigs using two different manufacturers of RFA and human equivalent doses of ThermoDox® that clearly
support the relationship between increased heating duration and doxorubicin concentrations.

47

The
OPTIMA Study was designed with extensive input from globally recognized HCC researchers and expert clinicians. The FDA also
provided formal written feedback to the Company on the study protocol and trial design. The OPTIMA Study was designed
to enroll up to 550 patients globally at approximately 65 clinical sites in the U.S., Canada, European Union (EU), China and other
countries in the Asia-Pacific region and will evaluate ThermoDox® in combination with standardized RFA, which will require
a minimum of 45 minutes across all investigators and clinical sites for treating lesions three to seven centimeters, versus standardized
RFA alone. The primary endpoint for this clinical trial is overall survival (“OS”), and the secondary endpoints are
progression free survival and safety. The statistical plan calls for two interim efficacy analyses by an independent Data Monitoring
Committee (“DMC”).

We
completed enrollment of 556 patients in the Phase III OPTIMA Study in August 2018. Data for the study will be reviewed as it matures
up to two interim analyses expected to be conducted in the second half of 2019 and in mid-2020. We expect that the final efficacy
analysis, if necessary, will be completed in early 2021. ThermoDox® has received U.S. FDA Fast Track Designation and has been
granted orphan drug designation for primary liver cancer in both the U.S. and the EU. Additionally, the U.S. FDA has provided
ThermoDox® with a 505(b)(2) registration pathway. Subject to a successful trial, the OPTIMA Study has been designed to support
registration in all key primary liver cancer markets. We fully expect to submit registrational applications in the U.S., Europe
and China. We expect to submit and believe that applications will be accepted in South Korea, Taiwan and Vietnam, three other
significant markets for ThermoDox® if it were to receive approval in Europe, China or the U.S.

On
December 18, 2018, we announced that the DMC for the OPTIMA Study completed its last scheduled review of all patients enrolled
in the trial and unanimously recommended that the OPTIMA Study continue according to protocol to its final data readout. The DMC’s
recommendation was based on the Committee’s assessment of safety and data integrity of all patients randomized in the trial
as of October 4, 2018. The DMC reviewed study data at regular intervals throughout the patient enrollment period, with the primary
responsibilities of ensuring the safety of all patients enrolled in the study, the quality of the data collected, and the continued
scientific validity of the study design. As part of its review of all 556 patients enrolled into the trial, the DMC evaluated
a quality matrix relating to the total clinical data set, confirming the timely collection of data, that all data are current
as well as other data collection and quality criteria.

On
August 5, 2019, the Company announced that the prescribed number of OS events had been reached for the first prespecified interim
analysis of the OPTIMA Phase III Study. Following preparation of the data, the first interim analysis was conducted by the DMC
on November 1, 2019. This timeline was consistent with the Company’s stated expectations and is necessary to provide a full
and comprehensive data set that may represent the potential for a successful trial outcome. In accordance with the statistical
plan, this initial interim analysis has a target of 118 events, or 60% of the total number required for the final analysis. At
the time of the data cutoff, the Company received reports of 128 events. The hazard ratio for success at 128 events is approximately
0.63, which represents a 37% reduction in the risk of death compared with RFA alone and is consistent with the 0.65 hazard ratio
that was observed in the prospective HEAT Study subgroup, which demonstrated a two-year overall survival advantage and a median
time to death of more than seven and a half years.

On
November 4, 2019, the Company announced that the DMC unanimously recommended the OPTIMA Study continue according to protocol.
The recommendation was based on a review of blinded safety and data integrity from 556 patients enrolled in the Company’s
multinational, double-blind, placebo-controlled pivotal Phase III OPTIMA Study. The DMC’s pre-planned interim efficacy review
followed 128 patient events, or deaths, which occurred in August 2019. Data presented demonstrated that PFS and OS data appear
to be tracking with patient data observed at a similar point in the Company’s subgroup of patients followed prospectively
in the earlier Phase III HEAT Study, upon which the OPTIMA Study is based.

The
data review demonstrated the following:

●

The
OPTIMA Study patient demographics and risk factors are consistent with what the Company observed in the HEAT Study subgroup
with all data quality metrics meeting expectations.

●

Median
PFS for the OPTIMA Study reached 17 months as of August 2019. These blinded data compare favorably with 16 months median PFS
for all 285 patients in the HEAT Study subgroup of patients treated with RFA >45 minutes.

●

Median
OS for the OPTIMA Study has not been reached as of August 5, 2019, however median OS appears to be consistent with the HEAT
Study subgroup of patients treated with RFA >45 minutes and followed prospectively for overall survival.

●

The
OPTIMA Study has lost only 4 patients to follow-up from the initiation of the trial in September 2014 through August 2019
while the trial design allows for 3% risk for loss per year, which at this point would have exceeded 60 patients.

48

While
the Company has not unblinded the study to report a hazard ratio, PFS and OS are tracking similarly to the subgroup of patients
who received more than 45 minutes of RFA in our HEAT Study and followed prospectively for more than three years. This subgroup
in the HEAT Study demonstrated a 2-year overall survival advantage and a median time to death of more than 7 ½ years. This
tracking appears to bode well for success at the second of two pre-planned interim efficacy analysis, which is intended
after a minimum of 158 patient deaths and is projected to occur during the second quarter of 2020. The hazard ratio for success
at 158 events is 0.70. This is below the hazard ratio of 0.65 observed in the HEAT Study subgroup of patients treated with RFA
> 45 minutes.

The
HEAT Study. On January 31, 2013, we announced that ThermoDox® in combination with radio frequency ablation
(“RFA”) did not meet the primary endpoint of progression free survival (“PFS”) for the 701-patient clinical
trial in patients with hepatocellular carcinoma (HCC), also known as primary liver cancer (the HEAT Study). We determined, after
conferring with the HEAT Study’s independent DMC, that the HEAT Study did not meet the goal of demonstrating persuasive
evidence of clinical effectiveness, that being a clinically meaningful improvement in progression free survival (PFS), that could
form the basis for regulatory approval. In the trial, ThermoDox® was well-tolerated with no unexpected serious
adverse events. Following the announcement of the HEAT Study results, we continued to follow patients for overall survival (OS),
the secondary endpoint of the HEAT Study. We have conducted a comprehensive analysis of the data from the HEAT Study to assess
the future strategic value and development strategy for ThermoDox®.

Findings
from the HEAT Study post-hoc data analysis suggest that ThermoDox® may substantially improve overall survival,
when compared to the control group, in patients if their lesions undergo a 45-minute RFA procedure standardized for a lesion greater
than 3 cm in diameter. Data from nine OS sweeps have been conducted since the top line PFS data from the HEAT Study were announced
in January 2013, with each data set demonstrating progressive improvement in clinical benefit and statistical significance. On
August 15, 2016, the Company announced the most recent post-hoc OS analysis from the HEAT Study. These results demonstrated that
in a large, well bounded subgroup of patients with a single lesion (n=285, 41% of the HEAT Study patients), the combination of
ThermoDox® and optimized RFA provided an average 54% risk improvement in OS compared to optimized RFA alone. The Hazard Ratio
at this latest OS analysis is 0.65 (95% CI 0.45 - 0.94) with a p-value of 0.02. Median OS for the ThermoDox® group has been
reached which translates into a two-year survival benefit over the optimized RFA group (projected to be greater than 80 months
for the ThermoDox® plus optimized RFA group compared to less than 60 months projection for the optimized RFA only group).
These data continue to strongly suggest that ThermoDox® may significantly improve Overall Survival compared to
an RFA control in patients whose lesions undergo optimized RFA treatment for 45 minutes or more as well as support the protocol
for our Phase III OPTIMA Study as described below.

Findings
from the HEAT Study post-hoc data analysis have shown to be well balanced and not diminished in anyway by other factors. Supplementary
computational modeling and prospective preclinical animal studies have shown additional support the relationship between heating
duration and clinical outcomes. These data have been presented, without objection, at multiple scientific and medical conferences
in 2013 through 2016 by key HEAT Study investigators and leading liver cancer experts.

On
October 16, 2017, the Company announced the publication of the manuscript, “Phase III HEAT STUDY Adding Lyso-Thermosensitive
Liposomal Doxorubicin to Radiofrequency Ablation in Patients with Unresectable Hepatocellular Carcinoma Lesions,” in Clinical
Cancer Research, a peer-reviewed medical journal. The article reports on one of the largest controlled studies in hepatocellular
carcinoma. It provides a comprehensive review of ThermoDox® for the treatment of primary liver cancer. The article
details learnings from the Company’s 701 patient HEAT Study and includes results from computer simulation studies and includes
findings from a post hoc subgroup analysis, all of which are consistent with each other and which - when examined together - suggests
a clearer understanding of a key ThermoDox® heat-based mechanism of action: the longer the target tissue is heated, the greater
the doxorubicin tissue concentration. Additionally, the article explores a new hypothesis prompted by these findings: ThermoDox®
when used in combination with Radiofrequency Ablation (RFA) standardized to a minimum dwell time of 45 minutes (sRFA > 45 minutes),
may increase the overall survival (OS) of patients with HCC. The lead author is Won Young Tak, M.D., Ph.D., Professor Internal
Medicine, Gastroenterology & Hepatology, Kyungpook National University Hospital Daegu, Republic of Korea, and there are 22
HEAT Study co-authors along with Nicholas Borys, M.D., Celsion’s senior vice president and chief medical officer.

49

IMMUNO-ONCOLOGY
Program

On
June 20, 2014, we completed the acquisition of substantially all of the assets of EGEN, a private company located in Huntsville,
Alabama. Pursuant to the Asset Purchase Agreement, CLSN Laboratories acquired all of EGEN’s right, title and interest in
and to substantially all of the assets of EGEN, including cash and cash equivalents, patents, trademarks and other intellectual
property rights, clinical data, certain contracts, licenses and permits, equipment, furniture, office equipment, furnishings,
supplies and other tangible personal property. A key asset acquired from EGEN was the TheraPlas Technology Platform and the first
drug developed from it is GEN-1.

THERAPLAS
Technology Platform

TheraPlas
is a technology platform for the delivery of DNA and mRNA therapeutics via synthetic non-viral carriers and is capable of providing
cell transfection for double-stranded DNA plasmids and large therapeutic RNA segments such as mRNA. There are two components of
the TheraPlas system, a plasmid DNA or mRNA payload encoding a therapeutic protein, and a delivery system. The delivery system
is designed to protect the DNA/RNA from degradation and promote trafficking into cells and through intracellular compartments.
We designed the delivery system of TheraPlas by chemically modifying the low molecular weight polymer to improve its gene transfer
activity without increasing toxicity. We believe that TheraPlas is a viable alternative to current approaches to gene delivery
due to several distinguishing characteristics, including enhanced molecular versatility that allows for complex modifications
to improve activity and safety.

The
design of TheraPlas delivery system is based on molecular functionalization of polyethyleneimine (PEI), a cationic delivery polymer
with a distinct ability to escape from the endosomes due to heavy protonation. The transfection activity and toxicity of PEI is
tightly coupled to its molecular weight therefore the clinical application of PEI is limited. We have used molecular functionalization
strategies to improve the activity of low molecular weight PEIs without augmenting their cytotoxicity. In one instance, chemical
conjugation of a low molecular weight branched BPEI1800 with cholesterol and polyethylene glycol (PEG) to form PEG-PEI-Cholesterol
(PPC) dramatically improved the transfection activity of BPEI1800 following in vivo delivery. Together, the cholesterol and PEG
modifications produced approximately 20-fold enhancement in transfection activity. Biodistribution studies following intraperitoneal
or subcutaneous administration of DNA/PPC nanocomplexes showed DNA delivery localized primarily at the injection site with only
small amount escaping into systemic circulation. PPC is the delivery component of our lead TheraPlas product, GEN-1, which is
in clinical development for the treatment ovarian cancer and in preclinical development for the treatment of glioblastoma. The
PPC manufacturing process has been scaled up from bench scale (1-2 g) to 0.6Kg, and several cGMP lots have been produced with
reproducible quality.

TheraPlas
has emerged as a viable alternative to current approaches due to several distinguishing characteristics such as strong molecular
versatility that allows for complex modifications to improve activity and safety with little difficulty. The biocompatibility
of these polymers reduces the risk of adverse immune response, thus allowing for repeated administration. Compared to naked DNA
or cationic lipids, TheraPlas is generally safer, more efficient, and cost effective. We believe that these advantages place Celsion
in strong position to capitalize on this technology.

GEN-1

GEN-1
is a DNA-based immunotherapeutic product for the localized treatment of ovarian and brain cancers by intraperitoneally administering
an Interleukin-12 (“IL-12”) plasmid formulated with our proprietary TheraPlas delivery system. In this DNA-based approach,
the immunotherapy is combined with a standard chemotherapy drug, which can potentially achieve better clinical outcomes than with
chemotherapy alone. We believe that increases in IL-12 concentrations at tumor sites for several days after a single administration
could create a potent immune environment against tumor activity and that a direct killing of the tumor with concomitant use of
cytotoxic chemotherapy could result in a more robust and durable antitumor response than chemotherapy alone. We believe the rationale
for local therapy with GEN-1 are based on the following:

●

Loco-regional
production of the potent cytokine IL-12 avoids toxicities and poor pharmacokinetics associated with systemic delivery of recombinant
IL-12;

●

Persistent
local delivery of IL-12 lasts up to one week and dosing can be repeated;

●

Ideal
for long-term maintenance therapy.

50

Ovarian
Cancer Overview

Ovarian
cancer is the most lethal of gynecological malignancies among women with an overall five-year survival rate of 45%. This poor
outcome is due in part to the lack of effective prevention and early detection strategies. There were approximately 22,000 new
cases of ovarian cancer in the U.S. in 2014 with an estimated 14,000 deaths. Mortality rates for ovarian cancer declined very
little in the last forty years due to the unavailability of detection tests and improved treatments. Most women with ovarian cancer
are not diagnosed until Stages III or IV, when the disease has spread outside the pelvis to the abdomen and areas beyond causing
swelling and pain, where the five-year survival rates are 25 - 41 percent and 11 percent, respectively. First-line chemotherapy
regimens are typically platinum-based combination therapies. Although this first line of treatment has an approximate 80 percent
response rate, 55 to 75 percent of women will develop recurrent ovarian cancer within two years and ultimately will not respond
to platinum therapy. Patients whose cancer recurs or progresses after initially responding to surgery and first-line chemotherapy
have been divided into one of the two groups based on the time from completion of platinum therapy to disease recurrence or progression.
This time period is referred to as platinum-free interval. The platinum-sensitive group has a platinum-free interval of longer
than six months. This group generally responds to additional treatment with platinum-based therapies. The platinum-resistant group
has a platinum-free interval of shorter than six months and is resistant to additional platinum-based treatments. Pegylated liposomal
doxorubicin, topotecan, and Avastin are the only approved second-line therapies for platinum-resistant ovarian cancer. The overall
response rate for these therapies is 10 to 20 percent with median overall survival of eleven to twelve months. Immunotherapy is
an attractive novel approach for the treatment of ovarian cancer particularly since ovarian cancers are considered immunogenic
tumors. IL-12 is one of the most active cytokines for the induction of potent anti-cancer immunity acting through the induction
of T-lymphocyte and natural killer cell proliferation. The precedence for a therapeutic role of IL-12 in ovarian cancer is based
on epidemiologic and preclinical data.

GEN-I
OVATION Study. In February 2015, we announced that the FDA accepted, without objection, the Phase I dose-escalation clinical
trial of GEN-1 in combination with the standard of care in neoadjuvant ovarian cancer (the “OVATION Study”). On September
30, 2015, we announced enrollment of the first patient in the OVATION Study. The OVATION Study was designed to (i) identify a
safe, tolerable and potentially therapeutically active dose of GEN-1 by recruiting and maximizing an immune response; (ii) to
enroll three to six patients per dose level and will evaluate safety and efficacy and (iii) attempt to define an optimal dose
for a follow-on Phase I/II study. In addition, the OVATION Study establishes a unique opportunity to assess how cytokine-based
compounds such as GEN-1, directly affect ovarian cancer cells and the tumor microenvironment in newly diagnosed patients. The
study was designed to characterize the nature of the immune response triggered by GEN-1 at various levels of the patients’
immune system, including:

●

Infiltration
of cancer fighting T-cell lymphocytes into primary tumor and tumor microenvironment including peritoneal cavity, which is
the primary site of metastasis of ovarian cancer;

●

Changes
in local and systemic levels of immuno-stimulatory and immunosuppressive cytokines associated with tumor suppression and growth,
respectively; and

●

Expression
profile of a comprehensive panel of immune related genes in pre-treatment and GEN-1-treated tumor tissue.

We
initiated the OVATION Study at four clinical sites at the University of Alabama at Birmingham, Oklahoma University Medical
Center, Washington University in St. Louis and the Medical College of Wisconsin. During 2016 and 2017, we announced data from
the first fourteen patients in the OVATION Study, who completed treatment. On October 3, 2017, we announced final
clinical and translational research data from the OVATION Study.

Key
translational research findings from all evaluable patients are consistent with the earlier reports from partial analysis of the
data and are summarized below:

●

The
intraperitoneal treatment of GEN-1 in conjunction with neoadjuvant chemotherapy resulted in dose dependent increases in IL-12
and Interferon-gamma (IFN-γ) levels that were predominantly in the peritoneal fluid compartment with little to no changes
observed in the patients’ systemic circulation. These and other post-treatment changes including decreases in VEGF levels
in peritoneal fluid are consistent with an IL-12 based immune mechanism;

51

●

Consistent
with the previous partial reports, the effects observed in the IHC analysis were pronounced decreases in the density of immunosuppressive
T-cell signals (Foxp3, PD-1, PDL-1, IDO-1) and increases in CD8+ cells in the tumor microenvironment;

●

The
ratio of CD8+ cells to immunosuppressive cells was increased in approximately 75% of patients suggesting an overall shift
in the tumor microenvironment from immunosuppressive to pro-immune stimulatory following treatment with GEN-1. An increase
in CD8+ to immunosuppressive T-cell populations is a leading indicator and believed to be a good predictor of improved overall
survival; and

●

Analysis
of peritoneal fluid by cell sorting, not reported before, shows a treatment-related decrease in the percentage of immunosuppressive
T-cell (Foxp3+), which is consistent with the reduction of Foxp3+ T-cells in the primary tumor tissue, and a shift in tumor
naïve CD8+ cell population to more efficient tumor killing memory effector CD8+ cells.

The
Company also reported positive clinical data from the first fourteen patients who completed treatment in the OVATION Study. GEN-1
plus standard chemotherapy produced positive clinical results, with no dose limiting toxicities and positive dose dependent efficacy
signals which correlate well with positive surgical outcomes as summarized below:

●

Of
the fourteen patients treated in the entire study, two patients demonstrated a complete response, ten patients demonstrated
a partial response and two patients demonstrated stable disease, as measured by RECIST criteria. This translates to a 100%
disease control rate and an 86% objective response rate (“ORR”). Of the five patients treated in the highest dose
cohort, there was a 100% ORR with one complete response and four partial responses;

●

Fourteen
patients had successful resections of their tumors, with nine patients (64%) having a complete tumor resection (“R0”),
which indicates a microscopically margin-negative resection in which no gross or microscopic tumor remains in the tumor bed.
Seven out of eight (88%) patients in the highest two dose cohorts experienced a R0 surgical resection. All five patients treated
at the highest dose cohort experienced a R0 surgical resection;

●

All
patients experienced a clinically significant decrease in their CA-125 protein levels as of their most recent study visit.
CA-125 is used to monitor certain cancers during and after treatment. CA-125 is present in greater concentrations in ovarian
cancer cells than in other cells; and

On
March 2, 2019, the Company announced final PFS results from the OVATION Study. Median progression-free survival (PFS) in patients
treated per protocol (n=14) was 21 months and was 17.1 months for the intent-to-treat population (n=18) for all dose cohorts,
including three patients who dropped out of the study after 13 days or less, and two patients who did not receive full NAC and
GEN-1 cycles. Under the current standard of care, in women with Stage III/IV ovarian cancer undergoing NAC, the disease progresses
within about 12 months on average. The results from the OVATION Study support continued evaluation of GEN-1 based on promising
tumor response, as reported in the PFS data, and the ability for surgeons to completely remove visible tumor at debulking surgery.
GEN-1 was well tolerated and no dose-limiting toxicities were detected. Intraperitoneal administration of GEN-1 was feasible with
broad patient acceptance.

GEN-1
OVATION 2 Study. The Company held an Advisory Board Meeting on September 27, 2017 with the clinical investigators and
scientific experts including those from Roswell Park Cancer Institute, Vanderbilt University Medical School, and M.D. Anderson
Cancer Center to review and finalize clinical, translational research and safety data from the Phase IB OVATION Study in order
to determine the next steps forward for our GEN-1 immunotherapy program.

On
November 13, 2017, the Company filed its Phase I/II clinical trial protocol with the U.S. Food and Drug Administration for GEN-1
for the localized treatment of ovarian cancer. The protocol is designed with a single dose escalation phase to 100 mg/m²
to identify a safe and tolerable dose of GEN-1 while maximizing an immune response. The Phase I portion of the study will be followed
by a continuation at the selected dose in 130 patients randomized Phase II study. On November 5, 2019, the Company announced that
the independent Data Safety Monitoring Board (DSMB) completed its safety review of data from the first eight patients enrolled
in the ongoing Phase I/II OVATION 2 Study. Based on the DSMB’s recommendation, the study will continue as planned and the
Company will proceed with completing enrollment in the Phase I portion of the trial.

In
the OVATION 2 Study, patients in the GEN-1 treatment arm will receive GEN-1 plus chemotherapy pre- and post-interval debulking
surgery. The OVATION 2 Study will include up to 130 patients with Stage III/IV ovarian cancer, with 12 to 15 patients in the Phase
I portion and up to 118 patients in Phase II. The study is powered to show a 33% improvement in the primary endpoint, PFS, when
comparing GEN-1 with neoadjuvant + adjuvant chemotherapy versus neoadjuvant + adjuvant chemotherapy alone. The PFS primary analysis
will be conducted after at least 80 events have been observed or after all patients have been followed for at least 16 months,
whichever is later.

52

Developed
with extensive input from the Company’s Medical Advisory Board, the OVATION 2 Study builds on promising clinical and translational
research data from the Phase IB dose-escalation OVATION I Study, in which enrolled patients received escalating weekly doses of
GEN-1 up to 79 mg/m² for a total of eight treatments in combination with NACT, followed by IDS. In addition to exploring
a higher dose of GEN-1 in the OVATION 2 study, patients will continue to receive GEN-1 after their IDS in combination with adjuvant
chemotherapy.

The
latest DSMB review of GEN-1 at 100 mg/m² has confirmed that there were no dose limiting toxicities detected in any of the
five patients dosed with GEN-1 and that intraperitoneal administration is well tolerated even when given with standard NACT. Of
the eight patients treated in the Phase I portion of the OVATION 2 Study, five patients were treated with GEN-1 plus NACT and
three patients were treated with NACT only.

In
March 2020, the Company announced highly encouraging initial clinical data from the first 15 patients enrolled in the ongoing
Phase I/II OVATION 2 Study for patients newly diagnosed with Stage III and IV ovarian cancer. The OVATION 2 Study combines GEN-1,
the Company’s IL-12 gene-mediated immunotherapy, with standard-of-care neoadjuvant chemotherapy (NACT). Following NACT,
patients undergo interval debulking surgery (IDS), followed by three additional cycles of chemotherapy.

GEN-1
plus standard NACT produced positive dose-dependent efficacy results, with no dose-limiting toxicities, which correlates well
with successful surgical outcomes as summarized below:

●

Of
the 15 patients treated in the Phase I portion of the OVATION 2 Study, nine patients
were treated with GEN-1 at a dose of 100 mg/m² plus NACT and six patients were treated
with NACT only. All 15 patients had successful resections of their tumors, with seven
out of nine patients (78%) in the GEN-1 treatment arm having an R0 resection, which indicates
a microscopically margin-negative resection in which no gross or microscopic tumor remains
in the tumor bed. Only three out of six patients (50%) in the NACT only treatment arm
had a R0 resection.

●

When
combining these results with the surgical resection rates observed in the Company’s
prior Phase Ib dose-escalation trial (the OVATION 1 Study), a population of patients
with inclusion criteria identical to the OVATION 2 Study, the data reflect the strong
dose-dependent efficacy of adding GEN-1 to the current standard of care NACT:

On
June 20, 2014, we completed the acquisition of substantially all of the assets of EGEN, which has changed its company name to
EGWU, Inc. after the closing of the acquisition, pursuant to an asset purchase agreement (the “Asset Purchase Agreement”)
dated as of June 6, 2014, by and between EGEN and Celsion. We acquired all of EGEN’s right, title and interest in and to
substantially all of the assets of EGEN, including cash and cash equivalents, patents, trademarks and other intellectual property
rights, clinical data, certain contracts, licenses and permits, equipment, furniture, office equipment, furnishings, supplies
and other tangible personal property. In addition, CLSN Laboratories assumed certain specified liabilities of EGEN, including
the liabilities arising out of the acquired contracts and other assets relating to periods after the closing date. The total purchase
price for the asset acquisition is up to $44.4 million, including potential future earnout payments of up to $30.4 million contingent
upon achievement of certain earnout milestones set forth in the Asset Purchase Agreement. At the closing, we paid approximately
$3.0 million in cash after the expense adjustment and issued 193,728 shares of our common stock to EGEN. The shares of common
stock were issued in a private transaction exempt from registration under the Securities Act, pursuant to Section 4(2) thereof.
In addition, the Company issued the Holdback Shares on June 16, 2017. On March 28, 2019, the Company and EGWU, Inc, entered into
the Amended Asset Purchase Agreement. Pursuant to the Amended Asset Purchase Agreement, payment of the earnout milestone liability
related to the Ovarian Cancer Indication of $12.4 million has been modified. The Company has the option to make the payment as
follows:

a)

$7.0
million in cash within 10 business days of achieving the milestone; or

b)

$12.4
million in cash, common stock of the Company, or a combination of either, within one year of achieving the milestone.

53

The
Company provided EGWU, Inc. 200,000 warrants to purchase common stock at a strike price of $0.01 per warrant share as consideration
for entering into this amended agreement. The warrant shares have no expiration and were fair valued at $2.00 using the closing
price of a share of Celsion stock on the date of issuance offset by the exercise price and recorded as a non-cash expense in the
income statement and were classified as equity on the balance sheet.

Our
obligations to make the earnout payments will terminate on the eight anniversary of the closing date. In the acquisition, we purchased
GEN-1, a DNA-based immunotherapy for the localized treatment of ovarian and brain cancers, and two platform technologies for the
development of treatments for those suffering with difficult-to-treat forms of cancer, novel nucleic acid-based immunotherapies
and other anti-cancer DNA or RNA therapies, including TheraPlas and TheraSilence.

Acquired
in-process research and development (“IPR&D”) consists of EGEN’s drug technology platforms: TheraPlas and
TheraSilence. The fair value of the IPR&D drug technology platforms was estimated to be $24.2 million as of the acquisition
date. As of the closing of the acquisition, the IPR&D was considered indefinite lived intangible assets and will not be amortized.
IPR&D is reviewed for impairment at least annually as of our third quarter ended September 30, and whenever events or changes
in circumstances indicate that the carrying value of the assets might not be recoverable. On December 31, 2016, the Company determined
one of its IPR&D assets related to its RNA delivery system was impaired and wrote off its fair value, incurring a non-cash
charge of $1.4 million during 2016. During its annual assessments on September 30, 2017 and 2018, the Company determined its IPR&D
asset related to its glioblastoma multiforme cancer (GBM) product candidate, originally fair valued at $9.4 million on the date
of acquisition, was impaired and wrote this asset’s carrying value down to $2.4 million collectively after those two assessments,
incurring non-cash charges of $2.5 million and $4.5 million during 2017 and 2018, respectively. On September 30, 2019, the Company
evaluated its IPR&D of the (GBM) product candidate and concluded that it is not more likely than not that the asset is further
impaired. On September 30, 2019 and 2018, the Company evaluated its IPR&D of the ovarian cancer indication and concluded that
it is not more likely than not that the asset is impaired. As no other indicators of impairment existed during the fourth quarter
of 2019, the Company concluded none of the other IPR&D assets were impaired at December 31, 2019. The carrying amount of the
ovarian cancer indication was $13.3 million at December 31, 2019 and 2018.

Covenant
Not to Compete (CNTC)

Pursuant
to the EGEN Purchase Agreement, EGEN provided certain covenants (“Covenant Not To Compete”) to the Company whereby
EGEN agreed, during the period ending on the seventh anniversary of the closing date of the acquisition on June 20, 2014, not
to enter into any business, directly or indirectly, which competes with the business of the Company nor will it contact, solicit
or approach any of the employees of the Company for purposes of offering employment.

Business
Plan

As
a clinical stage biopharmaceutical company, our business and our ability to execute our strategy to achieve our corporate goals
are subject to numerous risks and uncertainties. Material risks and uncertainties relating to our business and our industry are
described in “Part I, Item 1A. Risk Factors” in this Annual Report on Form 10-K.

We
had $16.7 million in cash, investments, interest receivable and deferred income tax asset as of December 31, 2019, as well
as $6.4 million we have raised thus far in 2020 under the 2019 Aspire Purchase Agreement and from the February 2020 Offering.
The Company has approximately $15 million available under the Capital on Demand Agreement with JonesTrading International Services
LLC. Given our development plans, we anticipate our current cash resources will be sufficient to fund our operations and
financial commitments through mid-2021. On March 5, 2020, we terminated the 2019 Aspire Purchase Agreement. Other than the Capital
on Demand Agreement with Jones Trading that provides us the ability to sell equity securities in the future, we have no other
committed sources of additional capital and there is uncertainty whether additional funding will be available when needed on terms
that will be acceptable to it, or at all. If the Company would not be able to obtain financing when needed, it could be unable
to carry out the business plan and may have to significantly limit its operations and its business and its financial condition
and results of operations could be materially harmed. The extent to which the recent global Covid-19 pandemic impacts
our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information
that may emerge concerning the severity of COVID-19 and the actions to contain or treat its impact, among others. Any significant
infectious disease outbreak, including the COVID-19 pandemic, could result in a widespread health crisis that could adversely
affect the economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial
condition and results of operations, including our ability to obtain additional funding, if needed.

54

Financing
Overview

Equity,
Debt and Other Forms of Financing

As
more fully discussed in Note 9 of the Financial Statement included in this Annual Report, during the fourth quarter of
2018, the Company received eligibility from the New Jersey Economic Development Authority to sell, and did sell, $11.1 million
of its unused New Jersey net operating losses under the Technology Business Tax Certificate Program, receiving $10.4 million of
non-dilutive funding in the process. During the fourth quarter of 2019, the Company received approval from the New Jersey Economic
Development Authority to sell $1.9 million its New Jersey net operating losses. In early 2020, the Company entered into an agreement
to sell these net operating losses and expects to receive net proceeds of approximately $1.8 million in the second quarter of
2020.

During
2018 and 2019, we issued a total of 5.1 million shares of common stock as discussed below for an aggregate $9.4 million in gross
proceeds. During the first quarter of 2020, the Company has issued a total of 5.6 million shares of common stock
for an aggregate of $6.4 million in gross proceeds as discussed in more detail below. In June 2018, we entered a $10 million loan
facility with Horizon Technology Finance Corporation (“Horizon”).

●

On
June 27, 2018, the Company entered into the Horizon Credit Agreement with Horizon that provided $10 million in new capital.
The Company drew down $10 million upon closing of the Horizon Credit Agreement on June 27, 2018. The Company anticipates that
it will use the funding provided under the Horizon Credit Agreement for working capital and advancement of its product pipeline.
The obligations under the Horizon Credit Agreement are secured by a first-priority security interest in substantially all
assets of Celsion other than intellectual property assets. The obligations will bear interest at a rate calculated based on
one-month LIBOR plus 7.625%. Payments under the loan agreement are interest only for the first twenty-four (24) months after
loan closing, followed by a 24-month amortization period of principal and interest through the scheduled maturity date.

●

On
August 31, 2018, the Company entered into the 2018 Aspire Purchase Agreement with Aspire Capital Fund LLC (“Aspire Capital”)
which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed
to purchase up to an aggregate of $15.0 million of shares of the Company’s common stock over the 24-month term of the
2018 Aspire Purchase Agreement. On October 12, 2018, the Company filed with the SEC a prospectus supplement to the 2018 Shelf
Registration Statement registering all of the shares of common stock that may be offered to Aspire Capital from time to time.
The timing and amount of sales of the Company’s common stock to Aspire Capital. Aspire Capital has no right to require
any sales by the Company but is obligated to make purchases from the Company as directed by the Company in accordance with
the Purchase Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future
funding, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. In consideration
for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, the Company issued to
Aspire Capital 164,835 Commitment Shares. The 2018 Aspire Purchase Agreement may be terminated by the Company at any time,
at its discretion, without any cost to the Company. During 2018 and 2019 the Company sold and issued an aggregate of 3.4 million
shares under the Purchase Agreement, receiving approximately $6.5 million. All proceeds from the Company received under the
2018 Aspire Purchase Agreement were used for working capital and general corporate purposes. As a result of the
Company and Aspire Capital entering into a new purchase agreement on October 28, 2019 discussed in the next paragraph, the
2018 Aspire Purchase Agreement was terminated.

●

On
October 28, 2019, Company, entered into the 2019 Aspire Purchase Agreement with Aspire Capital. The terms and conditions pursuant
to the 2019 Aspire Purchase Agreement are substantially similar to the 2018 Aspire Purchase Agreement. Pursuant to the new
2019 Aspire Purchase Agreement, Aspire Capital is committed to purchase up to an aggregate of $10.0 million of shares of the
Company’s common stock over the 24-month term of the 2019 Aspire Purchase Agreement. Concurrently with entering into
the 2019 Aspire Purchase Agreement, the Company also entered into a registration rights agreement with Aspire Capital (the
“Registration Rights Agreement”), in which the Company agreed to file one or more registration statements, as
permissible and necessary to register under the Securities Act of 1933, as amended (the “Securities Act”), registering
the sale of the shares of the Company’s common stock that have been and may be issued to Aspire Capital under the 2019
Aspire Purchase Agreement. In consideration for entering into the 2019 Aspire Purchase Agreement, the Company issued to Aspire
Capital an additional 100,000 Commitment Shares. On November 8, 2019, the Company filed with the SEC a Registration Statement
on Form S-1 registering all the shares of common stock that may be offered to Aspire Capital from time to time under the 2019
Aspire Purchase Agreement. During 2019, the Company sold 0.5 million shares of common stock under the 2019 Aspire
Purchase Agreement, receiving approximately $0.7 million in gross proceeds. On March 5, 2020, the Company delivered
notice to Aspire Capital terminating the 2019 Aspire Purchase Agreement effective as of March 6, 2020. During the
first quarter of 2020, the Company sold 1.0 million shares of common stock under the 2019 Aspire Purchase Agreement and received
$1.6 million in gross proceeds.

55

●

We
were a party to a Controlled Equity OfferingSM Sales Agreement (ATM) dated as of February 1, 2013 with Cantor Fitzgerald
& Co., pursuant to which we may sell additional shares of our common stock having an aggregate offering price of up to
$25 million through “at-the-market” equity offerings from time to time. During 2018, the Company sold 0.5 million shares of common stock under the ATM, receiving approximately
$1.2 million in net proceeds. On October 10, 2018, the Company delivered notice to Cantor terminating the ATM effective as
of October 20, 2018. From February 2013 through the date of termination, the Company sold 1.8 million shares of Common Stock
under the Sales Agreement generating gross proceeds of $12.8 million. The Company has no further obligations under the ATM.

●

On
December 4, 2018, the Company entered into a new Capital on DemandTM Sales Agreement (the “Capital on Demand
Agreement”) with JonesTrading Institutional Services LLC, as sales agent (“JonesTrading”), pursuant to which
the Company may offer and sell, from time to time, through JonesTrading shares of common stock having an aggregate offering
price of up to $16.0 million. The Company intends to use the net proceeds from the offering, if any, for general corporate
purposes, including research and development activities, capital expenditures and working capital. The Company is not obligated
to sell any Common Stock under the Capital on Demand Agreement and, subject to the terms and conditions of the Capital on
Demand Agreement, JonesTrading will use commercially reasonable efforts, consistent with its normal trading and sales practices
and applicable state and federal law, rules and regulations and the rules of The Nasdaq Capital Market, to sell common stock
from time to time based upon Celsion’s instructions, including any price, time or size limits or other customary parameters
or conditions the Company may impose. Under the Capital on Demand Agreement, JonesTrading may sell common stock by any method
deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933,
as amended. The Capital on Demand Agreement will terminate upon the earlier of (i) the sale of all shares of our common stock
subject to the Sales Agreement, and (ii) the termination of the Capital on Demand Agreement by JonesTrading or Celsion. The
Capital on Demand Agreement may be terminated by JonesTrading or the Company at any time upon 10 days’ notice to the
other party, or by JonesTrading at any time in certain circumstances, including the occurrence of a material adverse change
in the Company. The Company did not sell any shares under the Capital on Demand Agreement during 2018. During 2019,
the Company sold 0.5 million shares of common stock under the Capital on Demand Agreement, receiving approximately $1.0 million.

●

On
February 27, 2020, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with several institutional
investors, pursuant to which we agreed to issue and sell, in a registered direct offering (the “February 2020 Offering”),
an aggregate of 4,571,428 shares (the “Shares”) of our common stock at an offering price of $1.05 per share for
gross proceeds of approximately $4.8 million before the deduction of the Placement Agent fees and offering expenses. The Shares
were offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-227236). The Purchase
Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing. In
a concurrent private placement (the “Private Placement”), the Company agreed to issue to the investors that participated
in the Offering, for no additional consideration, warrants, to purchase up to 2,971,428 shares of Common Stock (the “Original
Warrants”). The Original Warrants were initially exercisable six months following their and were set to expire on the
five-year anniversary of such initial exercise date. The Warrants had an exercise price of $1.15 per share subject to adjustment
as provided therein. On March 12, 2020 the Company entered into private exchange agreements (the “Exchange
Agreements”) with holders the Warrants. Pursuant to the Exchange Agreements, in return for a higher exercise price of
$1.24 per share of Common Stock, the Company issued new warrants to the Investors to purchase up to 3,200,000 shares of Common
Stock (the “Exchange Warrants”) in exchange for the Original Warrants. The Exchange Warrants, like the Original
Warrants, are initially exercisable six months following their issuance (the “Initial Exercise Date”) and expire
on the five-year anniversary of their Initial Exercise Date. Other than having a higher exercise price, different issue date,
Initial Exercise Date and expiration date, the terms of the Exchange Warrants are identical to those of the Original Warrants.

Please
refer to Note 2 of the Financial Statements contained in this Form 10-K. Also refer to Item IA, Risk Factors, including,
but not limited to, “We will need to raise substantial additional capital to fund our planned future operations, and
we may be unable to secure such capital without dilutive financing transactions. If we are not able to raise additional capital,
we may not be able to complete the development, testing and commercialization of our product candidates.”

56

Critical
Accounting Policies and Estimates

Our
financial statements, which appear at Item 8 to this Annual Report, have been prepared in accordance with accounting principles
generally accepted in the U.S., which require that we make certain assumptions and estimates and, in connection therewith, adopt
certain accounting policies. Our significant accounting policies are set forth in Note 1 to our financial statements. Of those
policies, we believe that the policies discussed below may involve a higher degree of judgment and may be more critical to an
accurate reflection of our financial condition and results of operations.

Revenue
Recognition

In
May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09 “Revenue from Contracts with Customers (Topic 606),”
which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires
a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that
the company expects to receive for those goods or services. ASU 2014 - 09 was originally going to be effective on January 1, 2017;
however, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date,”
which deferred the effective date of ASU 2014-09 by one year to January 1, 2018. In March 2016, the FASB issued ASU No. 2016 -
8, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations. The amendments in this ASU
do not change the core principle of ASU No. 2014 - 09 but the amendments clarify the implementation guidance on reporting revenue
gross versus net. The effective date for the amendments in this ASU is the same as the effective date of ASU No. 2014-09. In April
2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Identifying Performance Obligations and Licensing),”
to clarify the implementation guidance on identifying performance obligations and licensing (collectively “the new revenue
standards”). The new revenue standards allow for either “full retrospective” adoption, meaning the standard
is applied to all periods presented, or “modified retrospective” adoption, meaning the standard is applied only to
the most current period presented in the financial statements. The new revenue standard became effective for us on January 1,
2018. Under the new revenue standards, we recognize revenue following a five-step model prescribed under ASU No. 2014-09; (i)
identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction
price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or
as) we satisfy the performance obligation. As further described in Note 16, the Company currently has only one contract subject
to the new revenue standards. After performance of the five-step model discussed above, the Company concluded the adoption of
the new revenue standards as of January 1, 2018 did not change our revenue recognition policy nor does it have an effect on our
financial statements using either the full retrospective or the modified retrospective adoption methods.

In-Process
Research and Development, Other Intangible Assets and Goodwill

During
2014, the Company acquired certain assets of EGEN, Inc. As more fully described in Note 5 to our Consolidated Financial Statements,
the acquisition was accounted for under the acquisition method of accounting which required the Company to perform an allocation
of the purchase price to the assets acquired and liabilities assumed. Under the acquisition method of accounting, the total purchase
price is allocated to net tangible and intangible assets and liabilities based on their estimated fair values as of the acquisition
date.

Lease
Accounting

In
February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases” - Topic 842 (ASC Topic 842), which
requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement
of financial position. Leases will be classified as either finance or operating, with classification affecting the pattern of
expense recognition in the income statement. This update also requires improved disclosures to help users of financial statements
better understand the amount, timing and uncertainty of cash flows arising from leases. The update became effective for fiscal
years beginning after December 15, 2018, including interim reporting periods within that reporting period. The FASB subsequently
issued the following amendments to ASC Topic 842, which have the same effective date and transition date of January 1, 2019:

ASU
No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows for a transition approach to initially apply ASU
2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the
period of adoption as well as an additional practical expedient for lessors to not separate non-lease components from the
associated lease component.

57

We
adopted Topic ASC 842 effective January 1, 2019 and elected to apply the available practical expedients and implement internal
controls to enable the preparation of financial information on adoption. We have identified all of our leases which consist of
the New Jersey corporate office lease and the Alabama lab facility lease and we estimate the adoption of this standard will result
in the recognition of right-of-use assets of approximately $1.4 million, related operating lease liabilities of $1.5 million and
reduced other liabilities by approximately $0.1 million on the consolidated balance sheets as of January 1, 2019 of approximately
$1.5 million related to our operating lease commitments, with no material impact to the opening balance of retained earnings.
See Note 15 for further discussions regarding the adoption of ASC Topic 842.

Statements
of Stockholders’ Equity

In
August 2018, the SEC issued a final rule to simplify certain disclosure requirements. In addition, the amendments expanded the
disclosure requirements on the analysis of stockholders’ equity for interim financial statements. In August and September
2018, further amendments were issued to provide implementation guidance on adoption of the SEC rule and transition guidance for
the new interim stockholders’ equity disclosure. We adopted this amended guidance in the first quarter of 2019. The adoption
of this amended guidance resulted in us disclosing the Condensed Consolidated Statements of Changes in Stockholders’ Equity
in each of the quarterly reporting period starting in 2019.

We
review our financial reporting and disclosure practices and accounting policies on an ongoing basis to ensure that our financial
reporting and disclosure system provides accurate and transparent information relative to the current economic and business environment.
As part of the process, the Company reviews the selection, application and communication of critical accounting policies and financial
disclosures. The preparation of our financial statements in conformity with accounting principles generally accepted in the U.S.
requires that our management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. We review our estimates and the methods by which they are determined on an ongoing basis. However,
actual results could differ from our estimates.

Results
of Operations

Comparison
of Fiscal Year Ended December 31, 2019 and Fiscal Year Ended December 31, 2018.

For
the year ended December 31, 2019, our net loss was $16.9 million compared to a net loss of $11.9 million for the year ended
December 31, 2018. The Company recognized $1.8 million and $10.4 million in tax benefits from the sale of its New Jersey net operating
losses under the Technology Business Tax Certificate Program in the fourth quarters of 2019 and 2018, respectively. With $16.7
million in cash, investments, interest receivable and deferred income tax asset at December 31, 2019 coupled with the $6.4 million
of additional capital raised during the first quarter of 2020, the Company believes it has sufficient capital resources to fund
its operations through mid-2021.

Technology
Development and Licensing Revenue

In
January 2013, we entered into a technology development contract with Hisun, pursuant to which Hisun paid us a non-refundable technology
transfer fee of $5.0 million to support our development of ThermoDox® in the China territory. The $5.0 million received as
a non-refundable payment from Hisun in the first quarter 2013 has been recorded to deferred revenue and will be amortized over
the ten-year term of the agreement; therefore, we recognized revenue of $500,000 in each of the years 2019 and 2018.

Research
and Development Expenses

Research
and development (“R&D”) expenses increased $1.2 million or 10% from $11.9 million in 2018 to $13.1
million in 2019. Costs associated with the Phase III OPTIMA Study were $4.1 million in 2019 compared to $4.7 million
in 2018. The prior year period was favorably impacted by a $0.8 million credit resulting from cost concessions negotiated with
the Company’s lead contract research organization (CRO) for the OPTIMA Study. Excluding this one-time credit, clinical development
costs for the Phase III OPTIMA Study decreased $1.4 million in 2019, due to the completion of enrollment of the study in August
2018. The Company continues to follow patients on the study through the two preplanned efficacy analyses and the final efficacy
analysis after 197 OS events. Costs associated with the OVATION 2 Study were $0.6 million in 2019 compared to $0.4 million in
2018. Regulatory costs were $1.1 million in 2019 compared to $0.3 million in 2018. Other clinical costs were $2.5 million in each
of 2019 and 2018. Costs associated with the production of ThermoDox® were $1.5 million during 2019 compared to $1.1 million
in 2018 as the Company is preparing registration batches at its three CMOs assuming a successful outcome of the OPTIMA Study.
R&D costs associated with the development of GEN-1 to support the OVATION program increased by $0.5 million to $3.3 million
in 2019 compared to $2.8 million in 2018.

58

General
and Administrative Expenses

General
and administrative expenses decreased to $8.0 million in 2019 compared to $9.7 million in 2018. This decrease is primarily attributable
to lower personnel costs of approximately $1.6 million which included a $1.7 million decrease in non-cash stock compensation expense
partially offset by an increase in salary and benefits in 2019 compared to 2018.

Change
in Earn-out Milestone Liability

The
total aggregate purchase price for the acquisition of assets from EGEN included potential future earn-out payments contingent
upon achievement of certain milestones. The difference between the aggregate $30.4 million in future earn-out payments and the
$13.9 million included in the fair value of the acquisition consideration at June 20, 2014 was based on the Company’s risk-adjusted
assessment of each milestone and utilizing a discount rate based on the estimated time to achieve the milestone. These milestone
payments are fair valued at the end of each quarter and any change in their value is recognized in the consolidated financial
statements.

On
March 28, 2019, the Company and EGWU, Inc, entered into an amendment to the Asset Purchase Agreement discussed in Note 8. Pursuant
to the Amended Asset Purchase Agreement, payment of the earnout milestone liability related to the Ovarian Cancer Indication of
$12.4 million has been modified. The Company has the option to make the payment as follows:

●

$7.0
million in cash within 10 business days of achieving the milestone; or

●

$12.4
million in cash, common stock of the Company, or a combination of either, within one year of achieving the milestone.

The
Company provided EGWU, Inc. 200,000 warrants to purchase common stock at a strike price of $0.01 per warrant share as consideration
for entering into the amended agreement. These warrants shares have no expiration and were fair valued at $2.00 using the closing
price of a share of Celsion stock on the date of issuance offset by the exercise price and recorded $0.4 million as an expense
in the income statement and were classified as equity on the balance sheet during 2019.

As
of December 31, 2019, the Company fair valued the earn-out milestone liability at $5.7 million and recognized a non-cash
benefit of $3.2 million for 2019 as a result of the change in the fair value of these milestones from $8.9 million at December
31, 2018. In assessing the earnout milestone liability at December 31, 2019, the Company the fair valued each of the two payment
options per the Amended Asset Purchase Agreement and weighted them at 80% and 20% probability for the $7.0 million
and the $12.4 million payments, respectively.

In
connection with the write down of the IPR&D asset mentioned below, the Company concluded there was a reduced probability of
payments of the earn-out milestones associated with the GBM asset as of September 30, 2018 and reduced the earnout milestone at
that time. As of December 31, 2018, the Company fair valued these milestones at $8.9 million and recognized a non-cash benefit
of $3.6 million in 2018 as a result of the change in the fair value of these milestones from $12.5 million at December 31, 2017.

Impairment
of IPR&D

After
our annual assessment of the totality of the events that could impair IPR&D at September 30, 2018, the Company determined
certain IPR&D assets related to the development of its GBM product candidate may be impaired. To arrive at this determination,
the Company assessed the status of studies in GBM conducted by its competitors and the Company’s strategic commitment of
resources to its studies in primary liver cancer and ovarian cancer. The Company concluded that the GBM asset, valued at $6.9
million, was partially impaired and wrote down the GBM asset to $2.5 million incurring a non-cash charge of $4.5 million in the
third quarter of 2018. The Company concluded none of the other IPR&D assets were impaired at December 31,
2018.

The
Company concluded none of the IPR&D assets were impaired further as of December 31, 2019.

59

Investment
income and interest expense

The
Company realized $0.5 million and $0.4 million of investment income from its short-term investments during 2019 and 2018, respectively.

The
Company entered a loan facility with Horizon Technology Finance Corporation in June 2018 and incurred interest expense of $1.4
million during 2019 compared to $0.7 million during 2018.

Income
Tax Benefit

Annually,
the State of New Jersey enables approved technology and biotechnology businesses with New Jersey net operating tax losses the
opportunity to sell these losses through the Technology Business Tax Certificate Program (the “NOL Program”), thereby
providing cash to companies to help fund their research and development and business operations. During the fourth quarter
of 2018, the Company received eligibility from the New Jersey Economic Development Authority to sell, and did sell, $11.1 million
of its unused New Jersey net operating losses under the Technology Business Tax Certificate Program, receiving $10.4 million of
non-dilutive funding. The Company received approval from the New Jersey Economic Development Authority to sell $1.9 million
of its New Jersey net operating losses recognizing a tax benefit for the year ended December 31, 2019 for the net proceeds
(approximately $1.8 million) by reducing the deferred income tax valuation allowance. In early 2020, the Company entered into
an agreement to sell these net operating losses and expects to receive net proceeds of approximately $1.8 million in the second
quarter of 2020. The Company has approximately $2.1 million in future tax benefits remaining under the NOL Program in future years.

Inflation

We
do not believe that inflation has had a material adverse impact on our revenue or operations in any of the past three years.

Financial
Condition, Liquidity and Capital Resources

Since
inception we have incurred significant losses and negative cash flows from operations. We have financed our operations primarily
through the net proceeds from the sales of equity, credit facilities sales of our New State net operating losses (as discussed
above) and amounts received under our product licensing agreement with Yakult and our technology development agreement with Hisun.
The process of developing and commercializing ThermoDox®, GEN-1 and other product candidates and technologies requires significant
research and development work and clinical trial studies, as well as significant manufacturing and process development efforts.
We expect these activities, together with our general and administrative expenses to result in significant operating losses for
the foreseeable future. Our expenses have significantly and regularly exceeded our revenue, and we had an accumulated deficit
of $291 million at December 31, 2019.

At
December 31, 2019 we had total current assets of $16.2 million (including cash, cash equivalents, short-term investment,
interest receivable of $14.9 million) and current liabilities of $7.9 million, resulting in net working capital of $8.3
million. At December 31, 2018 we had total current assets of $28.1 million (including cash, cash equivalents, short-term investments
and interest receivable of $27.6 million) and current liabilities of $6.1 million, resulting in net working capital of $22.0 million.
We have substantial future capital requirements to continue our research and development activities and advance our product candidates
through various development stages. The Company believes these expenditures are essential for the commercialization of its technologies.

Net
cash used in operating activities for 2019 was $20.3 million. Our net loss of $16.9 million for 2019 included the following non-cash
transactions: (i) $2.3 million in non-cash stock-based compensation expense, (ii) $0.4 million non-cash charge from the issuance
of warrants in connection with an amendment to the EGEN Asset Purchase Agreement (iii) $0.4 million in non-cash interest expense
and (iv) $3.2 non-cash benefit based on the change in the earn-out milestone liability. The $20.3 million net cash used
in operating activities was mostly funded from cash and cash equivalents, short term investments, and cash proceeds received in
equity financings during 2019. At December 31, 2019, we had cash, cash equivalents, short-term investment, and interest receivable
of $14.9 million.

On
June 27, 2018, the Company entered into the Horizon Credit Agreement with Horizon that provided $10 million in new capital. The
Company drew down $10 million upon closing of the Horizon Credit Agreement on June 27, 2018. The Company anticipates that it will
use the funding provided under the Horizon Credit Agreement for working capital and advancement of its product pipeline. The obligations
under the Horizon Credit Agreement are secured by a first-priority security interest in substantially all assets of Celsion other
than intellectual property assets. The obligations will bear interest at a rate calculated based on one-month LIBOR plus 7.625%.
Payments under the loan agreement are interest only for the first twenty-four (24) months after loan closing, followed by a 24-month
amortization period of principal and interest through the scheduled maturity date.

60

On
August 31, 2018, the Company entered into the 2018 Aspire Purchase Agreement with Aspire Capital Fund LLC (“Aspire Capital”)
which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed
to purchase up to an aggregate of $15.0 million of shares of the Company’s common stock over the 24-month term of the 2018
Aspire Purchase Agreement. On October 12, 2018, the Company filed with the SEC a prospectus supplement to the 2018 Shelf Registration
Statement registering all of the shares of common stock that may be offered to Aspire Capital from time to time. The timing and
amount of sales of the Company’s common stock to Aspire Capital. Aspire Capital has no right to require any sales by the
Company but is obligated to make purchases from the Company as directed by the Company in accordance with the Purchase Agreement.
There are no limitations on use of proceeds, financial or business covenants, restrictions on future funding, rights of first
refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. In consideration for entering into the
Purchase Agreement, concurrently with the execution of the Purchase Agreement, the Company issued to Aspire Capital 164,835 Commitment
Shares. The 2018 Aspire Purchase Agreement may be terminated by the Company at any time, at its discretion, without any cost to
the Company. During 2018 and 2019 the Company sold and issued an aggregate of 3.4 million shares under the Purchase Agreement,
receiving approximately $6.5 million. All proceeds from the Company received under the 2018 Aspire Purchase Agreement were used
for working capital and general corporate purposes. As a result of the Company and Aspire Capital entering into a new purchase
agreement on October 28, 2019 as discussed in the next paragraph, the 2018 Aspire Purchase Agreement terminated.

On
October 28, 2019, Company, entered into the 2019 Aspire Purchase Agreement with Aspire Capital. The terms and conditions pursuant
to the 2019 Aspire Purchase Agreement are substantially similar to the 2018 Aspire Purchase Agreement. Pursuant to the new 2019
Aspire Purchase Agreement, Aspire Capital is committed to purchase up to an aggregate of $10.0 million of shares of the Company’s
common stock over the 24-month term of the 2019 Aspire Purchase Agreement. Concurrently with entering into the 2019 Aspire Purchase
Agreement, the Company also entered into a registration rights agreement with Aspire Capital (the “Registration Rights Agreement”),
in which the Company agreed to file one or more registration statements, as permissible and necessary to register under the Securities
Act of 1933, as amended (the “Securities Act”), registering the sale of the shares of the Company’s common stock
that have been and may be issued to Aspire Capital under the 2019 Aspire Purchase Agreement. In consideration for entering into
the 2019 Aspire Purchase Agreement, the Company issued to Aspire Capital an additional 100,000 Commitment Shares. On November
8, 2019, the Company filed with the SEC a Registration Statement on Form S-1 registering all the shares of common stock that may
be offered to Aspire Capital from time to time under the 2019 Aspire Purchase Agreement. During 2019, the Company sold 0.5 million
shares under the 2019 Aspire Purchase Agreement, receiving approximately $0.7 million. On March 5, 2020, the Company delivered
notice to Aspire Capital terminating the 2019 Aspire Purchase Agreement with Aspire Capital effective as of March 6, 2020. The
Company sold 1.0 million shares receiving $1.6 million during 2020 until the date of termination under the 2019 Aspire Purchase
Agreement.

We
were a party to a Controlled Equity OfferingSM Sales Agreement (ATM) dated as of February 1, 2013 with Cantor Fitzgerald
& Co., pursuant to which we may sell additional shares of our common stock having an aggregate offering price of up to $25
million through “at-the-market” equity offerings from time to time. During 2018, the Company sold 0.5 million shares of common stock under the ATM, receiving approximately $1.2
million in net proceeds. On October 10, 2018, the Company delivered notice to Cantor terminating the ATM effective as of October
20, 2018. From February 2013 through the date of termination, the Company sold 1.8 million shares of Common Stock under the Sales
Agreement generating gross proceeds of $12.8 million. The Company has no further obligations under the Sales Agreement.

On
December 4, 2018, the Company entered into a new Capital on DemandTM Sales Agreement (the “Capital on Demand Agreement”)
with JonesTrading Institutional Services LLC, as sales agent (“JonesTrading”), pursuant to which the Company may offer
and sell, from time to time, through JonesTrading shares of Common Stock having an aggregate offering price of up to $16.0 million.
The Company intends to use the net proceeds from the offering, if any, for general corporate purposes, including research and
development activities, capital expenditures and working capital. The Company is not obligated to sell any Common Stock under
the Capital on Demand Agreement and, subject to the terms and conditions of the Capital on Demand Agreement, JonesTrading will
use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law,
rules and regulations and the rules of The Nasdaq Capital Market, to sell Common Stock from time to time based upon Celsion’s
instructions, including any price, time or size limits or other customary parameters or conditions the Company may impose. Under
the Capital on Demand Agreement, JonesTrading may sell Common Stock by any method deemed to be an “at the market offering”
as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Capital on Demand Agreement will terminate
upon the earlier of (i) the sale of all shares of our common stock subject to the Sales Agreement, and (ii) the termination of
the Capital on Demand Agreement by JonesTrading or Celsion. The Capital on Demand Agreement may be terminated by JonesTrading
or the Company at any time upon 10 days’ notice to the other party, or by JonesTrading at any time in certain circumstances,
including the occurrence of a material adverse change in the Company. The Company did not sell any shares under the Capital on
Demand Agreement during 2018. During 2019, the Company sold 0.5 million shares under the Capital on Demand Agreement, receiving
approximately $1.0 million.

61

On
February 27, 2020, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with several institutional
investors, pursuant to which we agreed to issue and sell, in a registered direct offering (the “February 2020 Offering”),
an aggregate of 4,571,428 shares (the “Shares”) of our common stock at an offering price of $1.05 per share for gross
proceeds of approximately $4.8 million before the deduction of the Placement Agent fees and offering expenses. The Shares were
offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-227236). The Purchase Agreement contains
customary representations, warranties and agreements by the Company and customary conditions to closing. In a concurrent private
placement (the “Private Placement”), the Company agreed to issue to the investors that participated in the Offering,
for no additional consideration, warrants, to purchase up to 2,971,428 shares of Common Stock (the “Original Warrants”).
The Original Warrants were initially exercisable six months following their and were set to expire on the five-year anniversary
of such initial exercise date. The Warrants had an exercise price of $1.15 per share subject to adjustment as provided therein.
On March 12, 2020 the Company entered into private exchange agreements (the “Exchange Agreements”) with holders the
Warrants. Pursuant to the Exchange Agreements, in return for a higher exercise price of $1.24 per share of Common Stock, the Company
issued new warrants to the Investors to purchase up to 3,200,000 shares of Common Stock (the “Exchange Warrants”)
in exchange for the Original Warrants. The Exchange Warrants, like the Original Warrants, are initially exercisable six months
following their issuance (the “Initial Exercise Date”) and expire on the five-year anniversary of their Initial Exercise
Date. Other than having a higher exercise price, different issue date, Initial Exercise Date and expiration date, the terms of
the Exchange Warrants are identical to those of the Original Warrants.

The
Company had $16.7 million in cash, investments, interest receivable and deferred income tax asset as of December 31, 2019,
as well as $6.4 million we have raised thus far in 2020 under the 2019 Aspire Purchase Agreement and the February 2020 Offering.
Given our development plans, we anticipate cash resources will be sufficient to fund our operations through mid-2020. The
Company has approximately $15 million available under the Capital on Demand Agreement with JonesTrading International Services
LLC. On March 5, 2020, we terminated the 2019 Aspire Purchase Agreement. Other than the Capital on Demand Agreement that provides
us the ability to sell equity securities in the future, we have no other committed sources of additional capital. However, our
future capital requirements will depend upon numerous unpredictable factors, including, without limitation, the cost, timing,
progress and outcomes of clinical studies and regulatory reviews of our proprietary drug candidates, our efforts to implement
new collaborations, licenses and strategic transactions, general and administrative expenses, capital expenditures and other unforeseen
uses of cash.

The
Company may seek additional capital through further public or private equity offerings, debt financing, additional strategic alliance
and licensing arrangements, collaborative arrangements, or some combination of these financing alternatives. If we raise additional
funds through the issuance of equity securities, the percentage ownership of our stockholders could be significantly diluted,
and the newly issued equity securities may have rights, preferences, or privileges senior to those of the holders of our common
stock. If we raise funds through the issuance of debt securities, those securities may have rights, preferences, and privileges
senior to those of our common stock. If we seek strategic alliances, licenses, or other alternative arrangements, such as arrangements
with collaborative partners or others, we may need to relinquish rights to certain of our existing or future technologies, product
candidates, or products we would otherwise seek to develop or commercialize on our own, or to license the rights to our technologies,
product candidates, or products on terms that are not favorable to us. The overall status of the economic climate could also result
in the terms of any equity offering, debt financing, or alliance, license, or other arrangement being even less favorable to us
and our stockholders than if the overall economic climate were stronger. We also will continue to look for government sponsored
research collaborations and grants to help offset future anticipated losses from operations and, to a lesser extent, interest
income.

If
adequate funds are not available through either the capital markets, strategic alliances, or collaborators, we may be required
to delay or, reduce the scope of, or terminate our research, development, clinical programs, manufacturing, or commercialization
efforts, or effect additional changes to our facilities or personnel, or obtain funds through other arrangements that may require
us to relinquish some of our assets or rights to certain of our existing or future technologies, product candidates, or products
on terms not favorable to us.

62

Contractual
Obligations

In
July 2011, we entered into a lease with Brandywine Operating Partnership, L.P., a Delaware limited partnership for a 10,870 square
foot premises located in Lawrenceville, New Jersey in connection with the relocation of our offices from Columbia, Maryland. In
late 2015, Lenox Drive Office Park LLC, purchased the real estate and office building and assumed the lease. Under the current
terms of the lease, which was amended effective May 1, 2017 and is set to expire on September 1, 2022, we reduced the size of
the premises to 7,565 square feet and are paying a monthly rent that ranges from approximately $18,900 in the first year to approximately
$20,500 in the final year of the amendment. On February 1, 2019, we amended the current terms of the lease to increase the size
of the premises by 2,285 square feet to 9,850 square feet and also extended the lease term by one year to September 1, 2023. In
conjunction with the February 1, 2019 lease amendment, we agreed to modify our one-time option to cancel the lease as of the 36th
month after the May 1, 2017 lease commencement date.

In
connection with the Asset Purchase Agreement, in June 2014, we assumed the existing lease with another landlord for an 11,500
square foot premises located in Huntsville, Alabama. In January 2018, we entered into a new 60-month lease agreement for 9,049
square feet with rent payments of approximately $18,100 per month.

Following
is a table of the lease payments and maturity of our operating lease liabilities as of December 31, 2019:

For the

years ending December 31,

2020

$

525,809

2021

530,734

2022

535,579

2023

233,117

2024 and thereafter

-

Subtotal future lease payments

1,825,239

Less imputed interest

(293,789

)

Total lease liabilities

$

1,531,450

Weighted average remaining life

3.45 years

Weighted average discount rate

9.98

%

For
the 2019, operating lease expense was $522,380 and cash paid for operating leases included in operating cash flows was $485,848.
For 2018, operating lease expense was $450,430 and cash paid for operating leases included in operating cash flows was $457,321.

Off-Balance
Sheet Arrangements

We
do not utilize off-balance sheet financing arrangements as a source of liquidity or financing.

ITEM
7A.

QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The
primary objective of our cash investment activities is to preserve principal while at the same time maximizing the income we receive
from our investments without significantly increasing risk. Some of the securities that we invest in may be subject to market
risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. For
example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the interest rate later
rises, the principal amount of our investment will probably decline. A hypothetical 50 basis point increase in interest rates
reduces the fair value of our available-for-sale securities at December 31, 2019 by an immaterial amount. To minimize this risk
in the future, we intend to maintain our portfolio of cash equivalents and marketable securities in a variety of securities, including
commercial paper, government and non-government debt securities and/or money market funds that invest in such securities. We have
no holdings of derivative financial or commodity instruments. As of December 31, 2019, our investments consisted of investments
in corporate notes and obligations or in money market accounts and checking funds with variable market rates of interest. We believe
our credit risk is immaterial.

63

ITEM
8.

FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

The
financial statements, supplementary data and report of independent registered public accounting firm are filed as part of this
report on pages F-1 through F-32 and incorporated herein by reference.

ITEM
9.

CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM
9A.

CONTROLS
AND PROCEDURES

(a)

Disclosure
Controls and Procedures

We
have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) under
the supervision, and with the participation, of our management, including our principal executive officer and principal financial
officer. Based on that evaluation, our principal executive officer and principal financial officer concluded that as of December
31, 2019, which is the end of the period covered by this Annual Report, our disclosure controls and procedures are effective.

(b)

Management’s
Report on Internal Control over Financial Reporting

Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process
designed by, or under the supervision of, our chief executive officer and chief financial officer, or persons performing similar
functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America (GAAP). Our internal control over financial reporting includes those
policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and disposition of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company
are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets
that could have a material effect on the financial statements.

Management
assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In making
this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
in the 2013 Internal Control-Integrated Framework. Based on its evaluation, management has concluded that the Company’s
internal control over financial reporting is effective as of December 31, 2019.

Pursuant
to Regulation S-K Item 308(b), this Annual Report does not include an attestation report of our company’s registered public
accounting firm regarding internal control over financial reporting.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how
well designed and operated can provide only reasonable, but not absolute, assurance that the control system’s objectives
will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their cost.

(c)

Changes
in Internal Control over Financial Reporting

There
have been no changes in our internal control over financial reporting in the fiscal quarter ended December 31, 2019, which were
identified in connection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the
Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.

ITEM
9B.

OTHER
INFORMATION

None

64

PART
III

ITEM
10.

DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The
information required by this Item 10 is herein incorporated by reference to the definitive Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this
Annual Report.

Our
Code of Ethics and Business Conduct is applicable to all employees, including the principal executive officer, principal financial
officer and principal accounting officer or controller, or persons performing similar functions. The Code of Ethics and Business
Conduct is posted on our website at www.celsion.com.

ITEM
11.

EXECUTIVE
COMPENSATION

The
information required by this Item 11 is herein incorporated by reference to the definitive Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this
Annual Report.

The
information required by this Item 12 is herein incorporated by reference to the definitive Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this
Annual Report.

The
information required by this Item 13 is herein incorporated by reference to the definitive Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this
Annual Report.

ITEM
14.

PRINCIPAL
ACCOUNTANT FEES AND SERVICES

The
information required by this Item 14 is herein incorporated by reference to the definitive Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this
Annual Report.

65

PART
IV

ITEM
15.

EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES

(a)
The following documents are filed as part of this Annual Report:

1.
FINANCIAL STATEMENTS

The
following is a list of the consolidated financial statements of Celsion Corporation filed with this Annual Report, together with
the reports of our independent registered public accountants and Management’s Report on Internal Control over Financial
Reporting.

All
financial statement schedules are omitted because the information is inapplicable or presented in the notes to the consolidated
financial statements.

1.

EXHIBITS

The
following documents are included as exhibits to this report:

EXHIBIT
NO.

DESCRIPTION

2.1*

Asset
Purchase Agreement dated as of June 6, 2014, by and between Celsion Corporation and EGEN, Inc., incorporated herein by reference
to Exhibit 2.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2014.

3.1

Certificate
of Incorporation of Celsion, as amended, incorporated herein by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q
of the Company for the quarter ended June 30, 2004.

3.2

Certificate
of Ownership and Merger of Celsion Corporation (a Maryland Corporation) into Celsion (Delaware) Corporation (inter alia, changing
the Company’s name to “Celsion Corporation” from “Celsion (Delaware) Corporation”), incorporated
herein by reference to Exhibit 3.1.3 to the Annual Report of the Company for the year ended September 30, 2000.

3.3

Certificate
of Amendment of the Certificate of Incorporation effective and filed on February 27, 2006, incorporated therein by reference
to Exhibit 3.1 to the Current Report on Form 8-K of the Company filed on March 1, 2006.

3.4

Certificate
of Amendment to Certificate of Incorporation effective October 28, 2013, incorporated herein by reference to Exhibit 3.1 to
the Current Report on Form 8-K of the Company filed on October 29, 2013.

66

3.5

Certificate
of Amendment to Certificate of Incorporation effective June 15, 2016, incorporated herein by reference to Exhibit 3.1 to the
Current Report on Form 8-K of the Company, filed on June 15, 2016.

3.6

Certificate
of Amendment to Certificate of Incorporation, effective May 26, 2017, incorporated herein by reference to Exhibit 3.1 to the
Current Report on Form 8-K of the Company, filed on May 26, 2017.

3.7

Amended
and Restated By-laws dated November 27, 2011, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form
8-K of the Company, filed on December 1, 2011.

4.1

Form
of Common Stock Certificate, par value $0.01, incorporated herein by reference to Exhibit 4.1 to the Annual Report of the
Company for the year ended September 30, 2000.

4.2

Form
of Representative’s Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.2 to the Current Report
on Form 8-K of the Company filed on October 31, 2017.

4.3

Form
of Placement Agent Common Stock Purchase Warrant incorporated herein by reference to Exhibit 4.4 to the Current Report on
Form 8-K of the Company filed on July 11, 2017.

4.4

Form
of Series AA Warrant, incorporated herein by reference to Exhibit 4.26 to the Registration Statement to the Registration Statement
on Form S-1 of the Company filed on February 13, 2017.

Celsion
Corporation 2007 Stock Incentive Plan, as amended, incorporated herein by reference to Exhibit 10.1 to the Current Report
on Form 8-K of the Company filed on May 16, 2017.

10.2

Form
Inducement Offer to Exercise Common Stock Purchase Warrants, incorporated herein by reference to exhibit 10.3 to the Quarterly
Report on Form 10-Q of the Company for the quarter ended September 30, 2017.

10.3

Form
of Warrant Exercise Agreement, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company
filed on June 26, 2017.

67

10.4

Form
of Warrant Exercise Agreement, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company
filed on June 23, 2017.

10.5

Form
of Warrant Exercise Agreement, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company
filed on June 9, 2017.

10.6***

Amended
and Restated Employment Agreement, effective March 30, 2016, between Celsion Corporation and Mr. Michael H. Tardugno, incorporated
by reference to Exhibit 10.8 to the Annual Report of the Company filed on March 30, 2016.

10.7***

Employment
Offer Letter, entered into on June 15, 2010, between the Company and Jeffrey W. Church, incorporated herein by reference to
Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on June 18, 2010.

10.8*

Patent
License Agreement between the Company and Duke University dated November 10, 1999, incorporated herein by reference to Exhibit
10.9 to the Annual Report of the Company for the year ended September 30, 1999.

10.9*

License
Agreement dated July 18, 2003, between the Company and Duke University, incorporated
herein by reference to Exhibit 10.1 to the Registration Statement on Form S-3 (File No.
333-108318) filed on August 28, 2003.

10.10*

Development,
Product Supply and Commercialization Agreement, effective December 5, 2008, by and between the Company and Yakult Honsha Co.,
Ltd., incorporated herein by reference to Exhibit 10.15 to the Annual Report of the Company for the year ended December 31,
2008.

10.11*

The
2nd Amendment to The Development, Product Supply And Commercialization Agreement, effective January 7, 2011, by and between
the Company and Yakult Honsha Co., Ltd. incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K
of the Company filed on January 18, 2011.

10.12

Lease
Agreement, executed July 21, 2011, by and between Celsion Corporation and Brandywine Operating Partnership, L.P., incorporated
herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on July 25, 2011.

10.13

First
Amendment to Lease Agreement, executed April 20, 2017, by and between Celsion Corporation and Lenox Drive Office Park, LLC,
incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 10-Q of the Company filed on November 14, 2017.

10.14*

Technology
Development Agreement effective as of May 7, 2012, by and between Celsion Corporation and Zhejiang Hisun Pharmaceutical Co.
Ltd., incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of the Company for the quarter
ended June 30, 2012.

10.15*

Technology
Development Contract dated as of January 18, 2013, by and between Celsion Corporation and Zhejiang Hisun Pharmaceutical Co.
Ltd., incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company for the quarter
ended March 31, 2013.

68

10.16***

Employment
Offer Letter effective as of June 2, 2014, between the Company and Khursheed Anwer incorporated herein by reference to Exhibit
10.27 to the Annual Report of the Company for the year ended December 31, 2014.

10.17***

Amended
and Restated Change in Control Agreement dated as of September 6, 2016, by and between the Company and Michael H. Tardugno,
incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2016.

10.18***

Amended
and Restated Change in Control Agreement dated as of September 6, 2016, by and between the Company and Nicholas Borys, M.D.,
incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2016.

10.19***

Amended
and Restated Change in Control Agreement dated as of September 6, 2016, by and between the Company and Jeffrey W. Church,
incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2016.

10.20***

Amended
and Restated Change in Control Agreement dated as of September 6, 2016, by and between the Company and Timothy J. Tumminello,
incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2016.

10.21

Form
of Securities Purchase Agreement incorporated herein by reference to Exhibit 10.33 to the Registration Statement on Form S-1
of the Company filed on February 13, 2017.

10.22

Lease
Agreement dated January 15, 2018, by and between Celsion Corporation and HudsonAlpha Institute of Biotechnology for office
and lab space located in Huntsville, Alabama incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form
10-Q of the Company for the quarter ended March 31, 2018.

10.23

Venture
Loan and Security Agreement dated June 27, 2018, by and between Celsion Corporation and Horizon Technology Finance Corporation
incorporated herein by reference to Exhibit 10.0 to the Quarterly Report on Form 10-Q of the Company for the quarter ended
June 30, 2018.

69

10.24

Common
Stock Purchase Agreement, dated August 31, 2018 between Celsion Corporation and Aspire Capital Fund, LLC incorporated by reference
to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on September 4, 2018.

10.25

Capital
on DemandTM Sales Agreement, dated December 4, 2018, between Celsion Corporation and JonesTrading Institutional
Services LLC incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on December
4, 2018.

10.26

Common Stock Purchase Agreement,
dated October 28, 2019 between Celsion Corporation and Aspire Capital Fund, LLC incorporated by reference to Exhibit 10.1
to the Current Report on Form 8-K of the Company filed on October 28, 2019.

The
following materials from the Company’s Annual Report for the fiscal year ended December 31, 2019, formatted in XBRL
(Extensible Business Reporting Language): (i) the audited Consolidated Balance Sheets, (ii) the audited Consolidated Statements
of Operations, (iii) the audited Consolidated Statements of Comprehensive Loss, (iv) the audited Consolidated Statements of
Cash Flows, (v) the audited Consolidated Statements of Changes in Stockholders’ Equity and (vi) Notes to Consolidated
Financial Statements.

*

Portions
of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange
Act of 1934, amended, and the omitted material has been separately filed with the Securities and Exchange Commission.

+

Filed
herewith.

^

Furnished
herewith.

**

XBRL
information is filed herewith.

***

Management
contract or compensatory plan or arrangement.

ITEM
16. FORM 10-K SUMMARY

None

70

SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused its annual report
to be signed on its behalf by the undersigned thereunto duly authorized.

CELSION
CORPORATION

Registrant

March
25, 2020

By:

/s/
MICHAEL H. TARDUGNO

Michael
H. Tardugno

Chairman
of the Board, President and Chief Executive Officer

March
25, 2020

By:

/s/
JEFFREY W. CHURCH

Jeffrey
W. Church

Executive
Vice President and

Chief
Financial Officer

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:

Name

Position

Date

/s/
MICHAEL H. TARDUGNO

Chairman
of the Board, President and

March
25, 2020

(Michael
H. Tardugno)

Chief Executive Officer(Principal
Executive Officer)

/s/
JEFFREY W. CHURCH

Executive
Vice President and Chief Financial

March
25, 2020

(Jeffrey
W. Church)

Officer
(Principal Financial Officer)

/s/
TIMOTHY J. TUMMINELLO

Controller
and Chief Accounting Officer

March
25, 2020

(Timothy
J. Tumminello)

/s/
AUGUSTINE CHOW

Director

March
25, 2020

(Augustine
Chow, Ph.D.)

/s/
FREDERICK J. FRITZ

Director

March
25, 2020

(Frederick
J. Fritz)

/s/
ROBERT W. HOOPER

Director

March
25, 2020

(Robert
W. Hooper)

/s/
ALBERTO R. MARTINEZ

Director

March
25, 2020

(Alberto
Martinez, M.D.)

/s/
DONALD BRAUN

Director

March
25, 2020

(Donald
Braun, Ph.D.)

/s/
ANDREAS VOSS

Director

March
25, 2020

(Andreas
Voss, M.D.)

71

Report
of Independent Registered Public Accounting Firm

To
the Board of Directors and Stockholders of

Celsion
Corporation:

Opinion
on the Consolidated Financial Statements

We
have audited the accompanying consolidated balance sheets of Celsion Corporation (the “Company”) as of December 31,
2019 and 2018, the related consolidated statements of operations, comprehensive loss, changes in stockholders' equity, and cash
flows for each of the two years in the period ended December 31, 2019 and the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years
in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Adoption
of New Accounting Standard

As
discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019
due to the adoption of ASU 2016-02, Leases (Topic 842).

Basis
for Opinion.

These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.

Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.

/s/
WithumSmith+Brown, PC

WithumSmith+Brown,
PC

We have
served as the Company's auditor since 2017.

Princeton,
New Jersey

March
25, 2020

F-1

CELSION
CORPORATION

CONSOLIDATED
BALANCE SHEETS

December
31,

2019

2018

ASSETS

Current
assets:

Cash
and cash equivalents

$

6,875,273

$

13,353,543

Investment in debt
securities - available for sale, at fair value

7,985,886

14,257,998

Accrued interest
receivable on investment securities

21,369

68,309

Advances
and deposits on clinical programs and other current assets

1,352,670

451,293

Total
current assets

16,235,198

28,131,143

Property
and equipment (at cost, less accumulated depreciation and amortization)